Debt Consolidation Strategies: Tips on Paying Off Your Debts

Updated: February 16, 2024

Having debts can cause unnecessary stress. And when it’s not properly managed, all the worry and stress can strain your relationships, and even lead to health problems.

That’s why it’s important to never let your debts go out of control. Or else, the compounding interests on your loans will drag your finances down in a matter of months, along with your peace of mind.

But what if you’re already going down that debt spiral? What can you do?

Below are some tips on debt management and consolidation that will help you climb out of the financial black hole.

Before applying for debt consolidation, do these first:

Before debt consolidation, you need to do debt management first. This means knowing exactly how much you owe and to whom and checking your financial capability to pay your debts.

Here are the things you need to do:

Create a financial inventory.

Before anything else, you must have a complete view of your financial state. List down all your assets and liabilities. Likewise, tabulate your monthly income and regular expenses.

Do cashflow management.

Study your cash flow and immediately stop spending on unnecessary stuff. Cut gym memberships, stop cable TV subscriptions, and other non-essential expenses that you have.

On the other side, see if there’s anything you can do to earn extra income. Maybe do some freelance work during weekends, or buy and sell stuff online.

Simulate a debt snowball payment strategy.

One of the best ways to manage and pay off your debts is by doing the snowball method. I’ve done this myself aside from teaching this strategy to friends and clients. And we can all attest that it works!

I’ve already written about this in great detail. So if you want to know how it works, then visit this page: How To Get Out Of Debt With The Snowball Method.

Plus, I have created a spreadsheet tool about the debt snowball method that you can download here: FREE Download: Credit Card Debt Payment Calculator Excel Spreadsheet.

Sell assets and settle debts.

From your financial inventory, identify assets that you can immediately sell. Sometimes, one big-ticket item is enough to cover most, if not all of your debts.

Sell your car. Sell your appliances and your gadgets. If it will completely wipe out your debts, then go ahead and sell your house and just rent a place. Or buy and move to a smaller home from what’s left after paying your debts.

People are normally averse to loss. And selling something of value is a painful experience. However, realize that it is always better to pay off as much of your debts now instead of later because you will lose more money if you delay.

Debt consolidation strategies

Sometimes, despite optimizing your cash flow, applying the debt snowball method, and selling your assets, it won’t still be enough to pay your debts. When this happens, it’s time to do some debt consolidation strategies.

Here are some tips that can help you do this successfully.

Apply for debt amnesty.

Go to each of your creditors and ask for amnesty. This means telling them that you can no longer pay the amount they’re asking, and then try to negotiate for a lower amount that you will promise to pay.

The goal here is to stop them from compounding your debt with interest fees and giving you a fixed amount that you need to pay. If the given amount is too high for you to settle in one go, then ask for an installment scheme.

Transfer your balance towards a lower interest rate.

If your debts are mostly credit card debts, then it could be possible to just transfer all your balances towards one credit card. However, make sure that you’re transferring towards a lower interest rate.

If you have three credit cards with 2.25%, 3.25%, and 3.50% monthly interest rates; then ask the first credit card company if you can transfer the balance of the other two cards to them.

After doing so, the next step is to close and cut the last two credit cards. This way, you only need to remember one payment due date, which will be a bit easier to manage with your cash flow.

Get a debt consolidation loan.

Getting approved for a debt consolidation loan is similar to applying for an unsecured personal loan. Employees or those who have proof of regular income have higher chances of qualifying for one.

Annual interest rates of debt consolidation loans currently range between 13.20% to 22.70% in the Philippines. They are offered by most Philippine commercial banks. So just go to them, ask and compare their requirements and terms, and choose your best option.

This is similar to transferring your balance towards a lower interest rate credit card. The difference is that you’re applying for a loan, and using that money to pay off all your debts. And effectively, you’ll be paying fewer fees on interest.

Moreover, this works well if you were able to apply for debt amnesty. Because you can immediately pay off all your creditors, and just worry about paying your debt consolidation loan to the bank.

Final Tips

Cash flow and debt management can be confusing, especially if your mind is clouded with worry and stress. Moreover, if you’re not really good with numbers, then it may be smart to ask for help from a financial planner.

Having someone on your side who can think objectively will help you avoid costly mistakes in your debt management and consolidation. Plus, they can also guide you on how to properly manage your finances and avoid going into debt again.

Lastly, paying off your debts is not a simple financial struggle. It is an emotional battle that requires focus and resilience.

To help you get through the rough days ahead, I recommend that you suit up with the proper mindset: 7 Mental Armors For Getting Out of Debt


  1. Thank you for this great wisdom, Sir Fitz! Because of the pandemic, I am able to ask my mother where our family is financially. I’m always away from home, living in the city, busy with studies. I was sad that my parents had debts from people because they wanted to provide us with proper education that they wished they had. A part of me wished that if I went abroad and did not pursue Medicine, we won’t be having debts and save for their retirement. Through your blog, I can help them manage the debts well with less worry.
    Please continue on spreading financial literacy to us. God bless you and keep safe po!

  2. Certainly a must share article if you have acquaintances that need help with debt. Hopefully, they will listen, take action and mend their ways.

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