Paid for by Discover® Personal Loans:

Sometimes, your overall financial picture can feel complicated, like a puzzle you’re trying to solve. You know that the pieces form a cohesive picture, but when you look at each one separately, it’s hard to see how it all comes together. That’s especially true when it comes to debt. It’s easy to focus exclusively on each credit card or loan instead of looking at how your total debt affects your long-term financial goals.

“Money is stressful. And when you avoid thinking about it, it only creates more stress,” says Matt Lattman, vice president of Discover Personal Loans. Taking a holistic view of your finances can help you hone in on strategies, not only to lower debt and build credit, but to create and work toward financial goals.

Here are three strategies to manage your debt and feel more confident about your finances.

1. Know what you owe

It’s not uncommon to look at your finances in silos, focusing on bills when they come due and checking your account balances after you’ve been paid. But it can be a good idea to look at your finances all at once: both the bills going out and your income coming in each month. If you have multiple credit cards that carry a balance, add up your total bills from each month to get a complete picture of what percentage of your money is going toward paying down debt.

Next, look at your credit utilization ratio. This number, which is used in calculating your credit score, is the amount of revolving credit (such as credit cards) you’re currently using divided by the amount of revolving credit you have available. Your credit utilization ratio is calculated across all the cards you have, but it is also calculated on each card. In general, the lower you keep your credit utilization ratio, both on individual cards and across cards, the better. If your credit utilization is higher than you’d like, it may be a good idea to come up with a strategy to pay more than your minimum monthly payments each month to lower the percentage.

Finally, look at the interest rates of your credit cards, which are often variable and can change over time. Credit card companies must disclose any interest rate changes, so be sure not to overlook the notification.

2. Decide on a strategy

Once you know what you owe, you can identify the best strategy to manage your debt. There are multiple approaches you can take. These include focusing on the smallest balance first, tackling the largest balance, paying down the card with the highest interest rate or prioritizing the highest credit utilization ratio.

You can also consider different solutions to consolidate your debt. One consolidation option you might research is a balance transfer, which often offers 0% introductory interest rates. Balance transfers work well when you have lower balances and make a plan to pay off your debt during the promotional period. Making payments during the introductory period allows you to save money on interest, so more of your payment goes directly to the balance you owe. Keep in mind, however, that if you take longer than the introductory rate to pay off your balance, your annual percentage rate will jump up, and it could be higher than the initial higher-interest rate debt you sought to consolidate.

Another debt consolidation option is a personal loan. Personal loans often work well when you have a larger balance or want to pay off your existing debt over a longer period of time. Unlike a credit card, many personal loans offer fixed interest rates, so your set regular monthly payment will never change, and you’ll be able to circle the date on the calendar of your final payment. Many lenders make the process of paying off your credit cards easy by giving you the option to send funds directly to your creditors.

While you’ll still need to pay back the money you owe, personal loans can simplify your finances by consolidating multiple credit card payments into one bill each month. Plus, you can lock in a fixed rate. “I think the biggest advantage of a personal loan is the predictability. People really like the predictability of knowing, ‘I've got a fixed monthly payment. I have a certain amount of time until I pay off my loan, and I have a path forward,’” Lattman says.

3. Make sure your system works for you

A debt strategy is only one half of the puzzle. The other half is figuring out a savings strategy. Even when you’re paying down debt, you can look for ways to build savings — and budget for fun things, too, Lattman says.

“If you commit to paying down higher-rate debt with a fixed monthly payment using a personal loan, you might have extra money to put away for a rainy day or to put towards something fun,” Lattman says, adding that “people know themselves better than any expert knows them. For some people, it might mean that if you have an extra $10, the most rewarding thing you can do is put that towards your debt. And for other people, it’s going out to lunch as a reward for having a really good month.”

By finding the right solution for your situation and staying on top of what’s happening with your money, you can develop a strategy, not only to pay down debt, but to budget for the future — occasional splurges included.

________

From Discover® Personal Loans:

You can save hundreds, or even thousands, of dollars on interest when you pay off up to $35,000 of higher-rate debt with a Discover personal loan. To estimate your savings, check out Discover’s debt consolidation calculator and input your outstanding amounts. Discover does not charge any origination fees and offers flexible repayment terms so you can choose the option that works best for you. Learn more about how Discover Personal Loans can help you reach your financial goals.

This article was paid for by Discover and created by Yahoo Creative Studios. The Yahoo Finance editorial staff did not participate in the creation of this content.