Getting out of debt could be a long and stressful experience. Here are five helpful debt management tips to help you succeed.
A family working full-time and barely scraping by. A single mother doing all that she can to keep a roof over her children’s heads and food on the table. Your grandmother, newly widowed, wondering what she will do to afford her bills.
If this sounds familiar, you’re not alone. A recent study has shown that 8 out of 10 Americans are in debt.
Learning how to handle debt can feel like an overwhelming task. Keep reading to see 5 helpful debt management tips to get you on the right path.
- Know How Much You Owe
Before you can figure out how to get rid of your debt, you need to know how much you owe.
- Make a list of debts. It should include who you owe and what the due dates and amounts are.
- Be sure to update the list periodically to keep up on the total amount of debt and check for any changes.
- Make On-Time Payments
Piling on late fees will only push you further into debt. If you think you’re not going to be able to make a payment on time, always call the company before the due date. Many companies are willing to make payment arrangements if you communicate your needs.
- Create a Monthly Budget
Now that you have your list of debts, write it out on your calendar or look back to the list every payday so you know what needs to be paid from each check. Look at how much money is coming in every month so you can calculate what you can afford on things that are variable, like groceries or entertainment.
- Start an Emergency Fund
Don’t let all of your hard work be for nothing. An emergency fund is vital to keep you from falling back into debt when the first unexpected bill arrives.
Decide on a short term goal for your emergency stash, and work it into your monthly budget. It might mean cutting out your morning latte, but being able to afford that unexpected car repair without having to charge it on your credit card will be so worth it.
- Where to Go for Help
If every month is a struggle, you may need to contact a professional for help with more options.
- Loan Consolidation – using a larger loan to pay off smaller individual loans to combine debts into one manageable monthly payment
- Bankruptcy – a court proceeding where a judge decides whether to discharge debts so they are no longer required to be paid
- Recovery Program – if you think you have a spending problem or your debt always seems unmanageable, consider a recovery program like Debtors Anonymous. This group can offer creative solutions and support to stop the overspending cycle.
The Takeaway on Debt Management Tips
Write your list, get organized, and commit to your goal! Learning how to manage debt does have a learning curve, but you’ve taken the first step.
Now that you’re armed with these debt management tips, take your new-found knowledge and motivation and get to work on becoming debt-free once and for all.