Did you know that, excluding home mortgages, the average American has $38,000 in personal debt? Are you overwhelmed by debt? Not to worry!
In this article, we’ll go over tips on personal debt management. Keep reading to learn more.
1. How Much Do You Owe?
Make a list of all your debts. Include the total amount, the payment you make each month, and the due date. Don’t forget to list the creditor. Having all your debts written down will help you see the big picture.
Refer to this list every so often. You can update this list in a few months as your debt changes.
2. Pay Your Bills on Time and Don’t Get Overwhelmed by Debt
Late payments are a lot more difficult to pay off. You will get a late fee added to the amount every time you miss a payment. If you miss two in a row, your interest rate could increase.
Do you use a calendar system on your smartphone or laptop? Enter your payments on your calendar and set a reminder a few days before its due.
3. Make the Smallest Payment
If you can’t afford to make a big payment, aim to pay the least amount. This will keep your account in good standing, and your debt won’t grow.
If you miss payments, it’s more challenging to catch up. Your account could get shut off.
4. What Debt Will You Pay off First?
First, try to pay off your credit card debt. Credit cards tend to have a high-interest rate. Make the credit card with the highest interest rate your main priority. Pay that debt off before working on repaying other debts.
5. Keep Accounts in Good Standing
If you don’t have a lot of resources to work with, that’s okay. You can only pay off what you can afford.
Focus on keeping your other accounts in decent standing. Don’t sacrifice those accounts for ones that have already hit your credit.
6. Build a Small Emergency Fund
If you don’t have any savings, you’ll fall into more debt if you have an emergency expense. A tiny fund will cover some costs that will come up throughout the year.
Aim to save $1,000 at first. Once you have that, try to aim for a larger fund like $2,000. Over time, build up savings that will cover six months of expenses.
7. Use a Budget Each Month
Using a budget will help you keep track of your money and make sure you have enough. Plan so you can see when you don’t have enough funds for bills. This way, you will have time to brainstorm how to get extra funds.
A budget will help you save extra money you have leftover. Place this money on your debts. Learn more about consolidating your debt.
We hope this guide on how to manage your debt was helpful. Create a budget so that you don’t get overwhelmed by debt and don’t forget to bookmark our site so you’ll never miss any of our resources.