Many people believe that living debt-free is the ultimate financial goal, and while that’s not entirely wrong, the truth is that not all debt is bad. Some types of debt can help you improve your financial situation, like a mortgage that allows you to own a home instead of paying rent for life.

On the flip side, there are harmful debts, like high-interest credit cards, that can drain your finances without offering any long-term value. These are the kinds of debts that can spiral out of control if not managed properly.

If you’re feeling overwhelmed by debt and don’t know where to start, the first step is to understand your debt types and create a plan to manage them. That’s exactly what we’ll cover in this article.

What is Debt Management?

Debt management simply means having a clear plan to repay your debts—whether it’s credit cards, personal loans, or unsecured debt (loans without collateral). A solid debt management plan typically includes:

• How much do you owe?
• Who do you owe it to?
• How and when do you make your payments?

These plans are usually designed for unsecured debt, such as credit cards and personal loans, and they’re a great step toward financial stability.

Good Debt vs Bad Debt

Not all debt is created equal. Some debt helps you build wealth or increase your income. Others lose value over time and add financial pressure.

1. Good Debt

Good debt is an investment in your future. It can help you earn more money or acquire valuable assets.

Examples include:

• Education Loans: Investing in your education can unlock better job opportunities and higher income.
• Business Loans: Launching your own business involves risk, but it could change your life if done wisely.
• Mortgage Loans: Buying property builds equity and can appreciate over time.

2. Bad Debt

Bad debt is money borrowed to buy things that lose value quickly or don’t generate income. It often comes with high interest and no return.

Examples include:

• Shopping for clothes or home items using high-interest credit cards.
• Taking loans for vacations.
• Car loans.

How to Create a Debt Repayment Plan?

If you’re like most people and have some debt, don’t worry—there are simple, practical steps to start your journey toward becoming debt-free:

1. Create a Budget

Track your monthly income and expenses to figure out how much you can allocate toward paying off your debt. Ask yourself:

• How much money comes in each month?
• Where does most of it go?
• What can I cut back on to free up cash?

2. Prioritize High-Interest Debts

List all your debts and for each one, start by paying off the debts with the highest interest rates first, as they cost you the most over time. Write down:

• Total amount owed
• Interest rate
• Minimum monthly payment

3. Simplify or Restructure Your Debt

Combine multiple debts into one with a lower-interest consolidation loan to make payments easier and save on interest. If that’s not an option, contact your creditors—you may be able to adjust your payment terms or lower what you owe.

How Can Money Fellows Help You Get Out of Debt?

Money Fellows offers a smart, digital way to manage your money through money circles.

Using the Money Fellows app, you can:

• Join flexible money circles.
• Track your payments and payouts easily.
• Use your payouts to pay off debt gradually.

This system doesn’t just help you save—it’s a flexible and interest-free way to handle debt, making it easier to stay on track and build better financial habits.

Download the app now and take your first step toward debt freedom.

Getting out of debt is completely possible, but it takes awareness, discipline, and a solid plan. By understanding the difference between good and bad debt and taking control of your spending, you’ll be on your way to a healthier financial future.

And with apps like Money Fellows, you don’t have to do it alone. One small step today can lead to major financial peace tomorrow.