How to Stay Financially Healthy: Tips for Managing Debt in 2025

Hoping to improve your financial health in 2025? Debt management is one of the best places to begin the journey. By paying down existing debt and taking steps to avoid debt in the future, you’ll be much closer to that clean bill of financial health. Read on for a few debt management tips to get you started.  

Choose a Debt Payoff Strategy 

Many people with debt find it useful to choose one of two debt payoff strategies: the snowball strategy and the avalanche strategy. The snowball strategy is all about building momentum. You pay off the lowest balance first, then move on to the next lowest balance, and so on. This strategy can be useful to anyone who needs positive motivation to keep hitting their financial goals. The avalanche strategy, on the other hand, means paying off your highest interest debt first—the benefit being that you can reduce your total interest owed in the long run.  

Refinance or Consolidate Loans 

If much of your debt is due to loans, consider refinancing or consolidating loans. Refinancing means replacing your existing loan with a new loan, to get better terms or a lower interest rate. Consolidation means bundling loans together into a new loan, so you get simpler monthly payments and possibly a lower interest rate. Talk with your lender about refinancing or consolidation options, or consider working with a new lender if you’re not happy with your current options. For example, you might opt to pay off a high-APR auto loan with a better value personal loan. 

Transfer Your Credit Card Balance 

Credit card balance transfers can be an excellent opportunity to lower your interest rate while paying off debt. For example, Harvard FCU offers an number of credit cards with a 0.00% APR for the first 12 months. This means you could move existing card debt to a Harvard FCU card, and not accumulate any interest for the first 12 months. Of course, it is important to budget accordingly and aim to pay off your balance within the year. Before doing a balance transfer, always check what fees are applicable. You can also talk with a representative about how opening a new card might affect your credit score.  

Commit to Household Budgeting  

Tackling debt is never a one-and-done job. In order to truly manage debt, it is critical avoid overspending. A household budget is one tried and true way to become smarter about spending, saving and paying off debt. Many people use an app, while others simply list their monthly income and expenses on a sheet of paper. Today, many mobile banking apps also help to track expenses. Whatever your system, the key is to plan for expenses and avoid any spending not in the budget. While reducing impulse buys can be a challenge, the budgeting process becomes easier with time—especially when you can see how much you're saving, and put those extra funds toward paying off debt.  

Build an Emergency Fund 

In most cases, it’s smarter to pay off high-interest debt before starting an emergency fund. However, when you’re ready, look at building an emergency fund so that the next time you need cash quick, you won’t need to rely on high-interest credit or unscrupulous loans. Experts recommend having three to six months of living expenses ready to go in your emergency fund, but even a much smaller amount of cash will help to cushion the blow if a member of your household loses a job or experiences an emergency.  

Get Help From a Professional 

Managing debt is no easy task. Most credit cards compound interest daily, which means the longer you struggle with high-interest debt, the harder it becomes to pay it off. Working with a financial counselor is one of the best ways to develop a debt payment strategy and avoid more debt in the future. Harvard FCU offers free debt education resources online, as well as free access for members to expert financial counseling through GreenPath. Take advantage of these resources to help you manage debt and meet other financial goals.