How to pay down loans and credit without compromising your practice’s financial health

Debt has a way of creeping into private practice. Maybe it started with startup costs. Maybe a slow season pushed you to lean on credit cards. Or maybe student loans have been hanging over your head since day one.

However it started, it’s not uncommon — but it can become a problem if you don’t have a plan.

Many therapists feel overwhelmed or avoidant when it comes to finances. It’s a skill gap, but one that’s totally fixable.

This guide will walk you through practical ways to manage and reduce your practice debt while keeping your financial footing strong.

Debt without a plan is one of the biggest practice killers

One of the most common mistakes therapists make is taking on debt without knowing how they’ll pay it back.

It’s easy to act out of urgency without slowing down to ask, “How does this fit into my financial picture?”

Without a plan, that debt lingers. It builds interest. It eats into cash flow. And before you know it, it’s shaping your business decisions — or worse, preventing you from making any at all.

If you’re considering taking on debt, ask yourself:

• What’s the actual cost of this debt (interest, fees, etc.)?
• How much can I afford to pay monthly without harming cash flow?
• How long will it realistically take to pay this off?

And if the debt’s already there, don’t panic. Start where you are. Get clear on what you owe and to whom, and commit to a payoff strategy that works with your current income.

Your practice is a business, so treat it like one

Therapists often enter private practice to gain freedom or serve their clients more fully, not because they wanted to manage accounts receivable or learn income ratios.

But when you avoid the business side, money issues pile up. Bills get missed. Taxes get underpaid. Credit cards fill the gap.

That’s when financial strain shows up — and starts to affect your quality of life.

If you want to get out of debt (and stay out), you need to:

• Separate business and personal expenses
• Track income and monthly expenses consistently
• Set aside money for taxes (self-employment taxes included)
• Revisit your financial systems regularly

Running lean doesn’t mean running blind. Even a solo therapist needs simple, repeatable systems to stay in control.

Credit card debt will quietly wreck your cash flow

Out of all the debt types, credit cards tend to be the most dangerous for therapy practices. They’re easy to use, hard to manage, and come with sky-high interest rates.

You might justify it with “it’s only $500” or “I’ll pay it off next month.” But balances grow fast, and once interest piles on, even small charges can spiral into big problems.

Here’s what makes credit card debt so harmful:

• It’s revolving, so there’s no natural endpoint
• It often comes with 20%+ interest rates
• It eats into your cash flow before you even notice

If you’re carrying balances, get aggressive about paying more than the minimum. Focus on the highest-interest card first, and if it helps with motivation, celebrate small payoffs along the way.

Avoid using credit cards for recurring practice expenses. If your rent or software subscriptions are going on a card you can’t pay off each month, that’s a red flag.

One simple rule to start paying down debt

Debt feels paralyzing when you don’t know where to start. Here’s a simple rule we recommend to clients all the time:

Pay the interest plus $100 toward the principal every month. Non-negotiable.

This gives you a clear, consistent target. It builds discipline. And it helps you chip away at the actual debt — not just tread water with interest payments.

If $100 feels like too much right now, scale it to what you can do. The key is forward motion. Confidence builds with every payment.

And if you’re juggling multiple debts, look at whether a snowball or avalanche strategy fits better:

• Snowball: Pay off the smallest balances first for momentum
• Avalanche: Tackle the highest-interest debt first to save money

There’s no perfect method. Just the one you’ll actually stick to.

Don’t guess — get professional advice

Therapists are good at helping others but not always great at asking for help themselves. That’s especially true with finances.

If you’re carrying business debt or unsure about your tax situation, talk to someone who knows this stuff.

A CPA or financial advisor with experience in therapy practices can help you:

• Set up a debt repayment strategy
• Evaluate cash flow and income ratios
• Plan for tax burdens and deductible expenses
• Avoid expensive missteps (like a poorly structured debt consolidation loan)

Ideally, you’d bring in professional help before taking on debt. But even if you’re already deep in it, there’s no shame in getting support now.

Make sure your income supports your debt payoff goals

Sometimes debt sticks around because the income just isn’t enough. This is where your pricing, client volume, and service mix come into play.

Start by asking:

• Are your rates aligned with your expenses and goals?
• Are you regularly collecting what you bill?
• Are there opportunities to expand income streams?

That might mean adding supervision, workshops, digital products, or other passive income strategies.

It might also mean cleaning up billing practices, chasing down unpaid claims, or improving your online presence to attract higher-paying private-pay clients.

Increasing income gives you more room to breathe and more power to knock out debt faster.

Don’t let taxes become debt

Taxes are a sneaky source of practice debt, especially if you’re new to self-employment.

Many therapists under-save or forget to set aside anything at all. Then tax season hits, and you’re forced to throw it on a credit card or take out a loan.

To avoid that trap:

• Open a separate savings account just for taxes
• Set aside a percentage of income with each payment (20–30% is common)
• Track your deductible business expenses all year, not just in April

Student loan interest, continuing education, software, and even part of your home office may be deductible, but only if you’ve got solid records.

Working with a CPA who understands therapy practices can help you reduce your taxable income legally and keep more of what you earn.

Build a financial system you can actually stick with

Paying off debt is important. But what matters more is building a system that keeps you out of debt long-term.

That means:

• Clear, simple bookkeeping
• Monthly check-ins with your numbers
• A habit of looking ahead, not just reacting to emergencies

If you’re still managing student loan debt, look into student loan refinancing to see if better terms could reduce your monthly payment or total interest.

Just read the fine print. Refinancing can affect protections like income-based repayment or forgiveness programs.

If you’ve fallen behind on bills or feel stuck, don’t ignore it. Small changes — like shifting how you schedule payments or renegotiating terms with your original creditor — can help you catch up.

Debt isn’t a moral failing. But staying in the dark about it only makes it worse.

Get real financial help

If you’re tired of stressing about your finances or spending hours trying to figure out the books, it’s time to bring in real support.

Leichter CPA provides outsourced accounting and bookkeeping for therapists in private practice. We help mental health professionals get organized, pay off debt, and stay financially stable — without spending nights buried in spreadsheets.

Let us handle the numbers, so you can focus on helping your clients.