In the modern world everything seems to be built on debt and it can be so easy to accumulate many small debts. It is just as important to know how to manage debt like this as well as a mortgage and a car loan or you can find yourself in deep financial trouble.
General Debt Management
There are some general areas that you should always use so that you have full knowledge and control of your finances. It is not uncommon for people to live from paycheck to paycheck without planning anything and just paying bills when you get them in the mail. This can be a recipe for disaster so here are some general areas that will show you how to manage debt with a longer term view.
List your debts and payments.
It is important that you have a document that lists all of the information about all of your debts. Out of sight out of mind is common with our finances. When we have a list that tells us exactly how much we owe, to whom and what the monthly payments are it is much simpler to say no when we find the latest gadget or fashion accessory that we must have.
Use a monthly payment schedule.
This is a great way to stay on top of your finances so that you know what you have to pay this month and next month. This means you are not finding yourself scrabbling for enough money to make a payment you forgot about. When you also add in your paycheck dates then you can see ways of saving money or getting ahead on payments.
Plan how to manage debt.
One of the advantages of having all of this information available is that it allows you to plan how to manage debt so you are in a better financial position. It is important to have a general plan and some specific goals. They do not just have to be about paying off your debt they can include saving a deposit for property or for a holiday. Goals let you achieve a financial milestone and to give yourself a treat for making the effort.
Create a budget.
When you create a budget you can not only see your debt and payments but also your income and expenses. Having a budget lets you prioritize what you want to achieve financially. If you are struggling then you can identify areas that you can cut out of your budget so you are spending less. Many people find when they compile a budget that they seem to have a hole where money just goes. This can be the snacks we buy every day or the high priced coffee we buy every morning. It can be the two or three drinks we stop in for on the way home from work. If you plug this budget hole you can find your finances looking much healthier.
Strategies To Manage Debt
Debt is very easy to accumulate and with proper management it can get out of control either through neglect or when we are hit by unexpected expenses from an emergency. Here are some ways to manage debt that has started to get away from you.
Create an emergency savings account.
It sounds like trying to shut the barn door after the horse has already bolted but one thing you can be assured of is that something else will crop up in the future. Once the immediate crisis is over it can be tempting just to let things fall back into place. Stay on top of your finances and while trying to reduce your debt also try to put a little away if you can to create a buffer for the hard times.
Prioritize how you manage debt.
If you have already missed a payment or two then you are already in the bad books with one or two of your creditors. They will contact you and try to pressure you to put them at the top of the list of payments. Be very careful! There is no point making problems with companies you are still in good standing with. Prioritize these accounts lowest and pay them when you can.
Try not to default.
It is very important to make every effort to pay your debts by the due date if at all possible. Falling behind can start to spiral out of control so ask for extra overtime or consider a part time job until you are back on your feet.
Do not wait.
If you are late with a payment do not wait to get a reminder notice pay it immediately and contact the company and let them know you have paid. This will help to stop it appearing on your credit report.
Help With Managing Debt
If you have problems with you financial affairs and need someone to help show you how to manage debt here are some places you can go to get that help.
- Credit counseling.
- Debt relief companies.
- Debtors anonymous