Debt Management for Salary Workers: Escape the Debt Trap

Debt management roadmap illustration

Debt is a double‑edged sword

Some debt helps you build assets (education, home), but high‑interest consumer debt quickly destroys financial health.

Good debt vs. bad debt

Good debt: mortgage, education loans, business investment
Bad debt: credit cards, payday loans, high‑interest consumer loans

The 4‑step debt cleanup plan

1) List all debts

Include balance, interest rate, and minimum payment.

2) Prioritize by interest rate

Pay highest rate first (avalanche method) or smallest balance first (snowball method).

3) Stop new high‑interest debt

Cut credit card usage until balances are under control.

4) Rebuild a safety buffer

After debt drops, rebuild emergency fund to avoid relapse.

When debt is too heavy

Warning signs:

Paying only minimums
Borrowing to pay old debt
Debt‑to‑income ratio > 40%

Consider restructuring or professional help if needed.

Quick checklist

Track all debts with rates
Choose avalanche or snowball
Stop new high‑interest borrowing
Rebuild emergency fund

Disclaimer

This article is for general financial education and information only and does not constitute investment, insurance, tax, or legal advice. Please make decisions based on your situation and consult professionals if needed.