Managing debt can feel overwhelming, especially when you’re juggling bills, loans, and credit cards. It can feel like your robbing Peter to pay Paul.

I get asked all the time, *“Where do I even start to pay off my debt when I’m drowning?”*

The truth is, debt isn’t inherently bad, it’s how you handle it that matters. By understanding credit, becoming aware of your spending habits and creating a plan, you can turns debt from a stressor into a tool that works for you.

Understand Credit

Credit isn’t just a number, it’s a reflection of how you manage money over time. It shows lenders (and sometimes landlords, employers, and even insurance companies) how responsible you are with borrowed money.

Your credit score is like a financial report card, typically ranging from 300–850. The higher the score, the more appealing you are to lenders. This means better access to low-interest loans, credit cards, and financial opportunities.

What Makes Up your Credit Score?

Payment History (35%)

Do you pay your bills on time? Late payments are one of the fastest ways to lower your score.
Even one missed payment can hurt BUT consistent on-time payments rebuild it.

Amount Owed (30%)

Are your credit balances maxed out?
If your credit card limit is $1,000 and you regularly keep a $900 balance, that’s 90% utilitization which is a red flag to lenders.
Try to keep your usage under 30% of your limit

Length of Credit (15%)

How long have you had credit accounts?
The longer your accounts stay open and in good standing, the better.
Keeping older credit cards open, even if unused, can help your credit score.

Types of Credit (10%)

Mix of credit cards, car loans, student loans or mortgages show you can handle different types of financial responsibility.

New Credit (10%)

Each time you apply for a new card or loan, your score might dip temporarily,
Too many new accounts at once can signal risk but don’t be afraid to shop around for a better loan or mortgage rate.
- If applications are made within a short period of time (usually 14-45 days), they often count as one inquiry, not several.

Mindset tip: Your credit isn’t your identity, it’s just a snapshot of your habits. Remember, you can always improve it.

Understanding Your Spending Habits

Before tackling debt or improving credit, it’s important to understand where your money is going. Your spending habits reveal patterns, priorities, and areas where small changes can make a big impact.

I learned this the hard way. I was approved for my first credit card as a freshman in college and maxed it out almost immediately! It took me years to pay it off because I didn’t know how to manage debt responsibly. That experience taught me that debt requires self-control and that only comes from awareness.

Start with a Budget:

Track all your spending for at least a month. Notice every coffee, subscription, and impulse buy.
Are you spending more than you make? Identify habits that lead to overspending.
Categorize expenses: needs vs. wants vs. “fun” money.

Tips to adjust habits:

Set spending limits for “fun” categories, like dining out or entertainment.
Use apps or spreadsheets to monitor daily or weekly spending.
Pair habit tracking with a small reward. Celebrating small wins helps it stick.

Mindset tip: Awareness is the first step! If you find you’ve been overspending, don’t feel bad! Identify the why behind it and come up with a plan to stay on track moving forward.

Creating a Plan

Know What You Owe

Before you can take control, you have to see the full picture.

List all your debts. Every credit card, student loan, car loan and personal loan.
Write out all the balances, interest rates, and minimum payments.
Then categorize it: high balance vs low balance, high-interest vs. low-interest, necessary vs. discretionary.

Mindset tip: Seeing the full list can be overwhelming & scary but clarity replaces fear with direction. You can’t fix what you don’t see.

Ways of Tackling Debt

Snowball Method:

Start by paying off the debt with the smallest balance first, while making minimum payments on the rest.

As you pay off each account, roll that payment into the next debt.

Celebrate every balance you eliminate! Each payoff is a visible reminder of your progress and a powerful motivator to stay consistent.

Avalanche Method:

If cutting down on interest feels more motivating, start with the highest-interest debt and make minimum payments on the rest.
You’ll save more in the long run, it might just take a little longer to feel those first wins. Every payment still counts!

Extra Tips:

Automate payments to avoid missed due dates or late fees.
Ask for lower interest rates. Many lenders have programs available for military members, hardship situations or long-time customers. It never hurts to ask!
Consider balance transfers if it helps lower your rate and you have a plan to pay it off before the promotional period ends.
Avoid new, unnecessary debt. Put those cards in a drawer or nightstand (literally!) while you focus on paying down your debt.

Mindset tip: Progress > perfection! Even one extra payment or a few extra dollars moves you closer to freedom.

Using Credit Wisely Moving Forward

Pay bills on time, every time. Automate it!
Keep credit card balances low (Ideally less than 30% of your limit).
Pay balances in full whenever possible.
Avoid closing old accounts unless they have fees.
Limit how often you apply for new credit.
Check your credit report regularly for errors (you get a free copy once a year at AnnualCreditReport.com).

Small Wins Lead to Big Freedom

Debt may feel heavy, but small consistent actions create momentum:

Paying an extra $25 toward your credit card
Catching up on a past-due bill
Tracking all spending for a month

Each step builds confidence and reduces stress.

At Funwell, we help you see your full financial picture and create a plan that works for your life and moving toward your goals.

Take control today. Small steps now = financial freedom later. 💛

Debt & Credit: Taking Control of What You Owe