Financial Planning When You're Juggling Debt

By Jackie Lam, AFC®
Published on: 09/19/2023

Overwhelm. Anxiety. Dread. All these words might come to mind when you're shouldering debt while trying to stay on top of your bills. It's a lot to juggle, no doubt. The good news is there are ways you can still keep your money goals top of mind while paying off debt. Here, we look at a few ways how.

1. Stash cash away for an emergency fund

First, you must tuck away some funds into your rainy day fund. It might seem counterintuitive, especially when you'd instead like to buckle down and toss any "leftover" money toward crushing your debt. But if you don't have a bit of a cash cushion, guess what? It's easy to spiral into a deeper hole.

A good rule of thumb is to have three to six months of basic living expenses—more if you're a freelancer. To start, create a savings account just for your emergency fund. Then, aim to stash away a month's living expenses and go from there. Once you have enough tucked away, you can get more aggressive in paying off your debt.

2. Make the minimum payments each month

It would be great if you could pay off your debt yesterday. But when you're juggling with covering basic expenses and trying to save for both short- and long-term goals, it can feel like pushing a rock up a mountain.

Whatever happens in your life, it's important to make your auto, mortgage, and monthly loan payments your top priority. Why's that? It's important to keep a roof over your head and a car to get to work. Plus, paying off your loans on time will help build your credit and keep you in good standing.

Also, be sure to make minimum monthly payments on your credit cards. Not doing so will cost you more in interest and late fees, not to mention, it could hurt your credit score. Because credit cards usually have the highest interest rates, do your best not to put additional charges on them.

Call your lender or credit card issuer if you're having trouble making minimum payments. And see if you can talk to someone in the Financial Hardship Department and explain your situation. If you're in good standing, chances are you can and they may have a workable solution to help you.

3. Reach out to collections

If some of your debt has defaulted and gone to debt collections—it happens—the first thing you want to do is to see where your debt is. Get the collection agency's name, contact information, and mailing address. Next, you'll want to get into the specifics of debt, such as the outstanding balance and the name of the credit card issuer or lender.

It can be scary, no doubt, but these debt collection reps are human, and talking to them and letting them know you are aware of the debt and your responsibility to pay it off is an essential first step. Even if you're not in a place where you can pay in full, you can discuss your situation and see what options are available.

4. Automate your savings goals

What? Save when you have debt? Impossible, right? Sure, you have bills to pay. You have looming debt. But when all your money goes toward your living expenses and debt load, it might feel like nothing is left for you and your savings goals. Then, begin by stashing away a little each month.

5. Give up big purchases and find ways to cut back

For the time being, it might be a good idea to hit "pause" on spending money on vacations and making large-ticket purchases, such as that new laptop or sofa set you've had your eye on. Sure, there's Buy Now, Pay Later (BNPL) plans, but isn't that really just another form of short-term debt.

Along the same lines, find ways to cut back—recurring subscriptions, eating out, and so forth. Any money saved and go straight into your debt payoff efforts.

6. Manage debt fatigue

Debt can spark many emotions—anger, stress, helplessness, and fatigue. Physical exhaustion might set in especially if you've been doing side hustles on top of your day job to make extra payments. Or perhaps you can't have fun and enjoy life until you clear your debt. To manage debt fatigue, you can do the following:

  • Treat yourself to small things when you hit a milestone. For example, when you've paid $500 off your car loan, enjoy a meal at your favorite place.
  • Journal about your debt. Let it all out. For example, the Dear Debt blog shows how you can write a letter to your debt, expressing your relationship to your debt and the emotions around it.
  • Work at your own pace. You might hear stories of people who paid off $80,000 a year. Those stories might be inspiring, but they also pressure you to go all out and pay your debt as quickly as possible. Go at a speed that works for you and your situation, and don't forget to look back and remember all the progress you've made so far.

7. Look into options to help alleviate your debt

Some ways to help release the pressure valve from your obligation include:

  • Debt management plan (DMP). This is where you work with a third party who helps you develop a game plan to pay off your debt. They can negotiate with creditors on your behalf to see if they can lower your payments, interest rate, or both. A downside of a debt management plan is that it usually requires you to close your credit card accounts, which can negatively impact your credit in the short term.
  • Balance credit card transfer. You might qualify for a credit card with a zero percent introductory period if you have a strong credit score. The no-interest period usually lasts between 6 to 18 months. It works by transferring the balance from an existing card onto your new card. If you can knock out your debt before the intro period ends, you can save a significant chunk of change in interest fees.

A word of caution: this route also comes with hefty balance transfer fees, which are typically between 3% and 5% of the balance being transferred. Plus, once the introductory period is over your interest rate kicks over to the standard rate. So do the math, and make sure you can reasonably pay off the card during the intro, zero-interest period.

8. Do an insurance check

Speaking of financial planning, it's a good idea to look at your insurance policies—auto, health, disability, and life—and ensure you have enough suitable types of coverage.

To save on insurance, see if you are comfortable increasing your deductible, which can lower your premium. It also doesn't hurt to see if you qualify for any discounts. For instance, if your driving record has improved, you could snag savings on being a good driver on your car insurance.

9. Tuck a little away for retirement

If your workplace offers a retirement plan, such as a 401(k) and 403(b), see if you can save a small percentage of each paycheck for your retirement. Even 1% or 2% makes a difference over time.

If your employer offers matching contributions, take advantage of it and try to set aside as much as possible. Usually, your retirement contributions are deducted automatically, which means you likely won't notice the difference.

As you can see, financial planning is indeed possible when you're paying off debt. The key is to stay focused and look for ways to tackle different areas of your financial wellness.

About the author

A personal finance writer for over 8 years, Jackie Lam covers money management, lending, insurance, investing, and banking, and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives, and overcome mental and emotional blocks.

Her work has appeared in publications such as Bankrate, Time's NextAdvisor, CNET, Forbes,, and BuzzFeed. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award, and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming, and daydreaming about stickers.

Editorial policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).

self logo
Written on September 19, 2023
Self is a venture-backed startup that helps people build credit and savings.

Self does not provide financial advice. The content on this page provides general consumer information and is not intended for legal, financial, or regulatory guidance. The content presented does not reflect the view of the Issuing Banks. Although this information may include references to third-party resources or content, Self does not endorse or guarantee the accuracy of this third-party information. Any Self product links are advertisements for Self products. Please consider the date of publishing for Self’s original content and any affiliated content to best understand their contexts.

Take control of your credit today.