While many people feel that it’s a shameful thing, most adults have some amount of debt. Whether it be from student, home, or car loans, credit balances, or other bills, debt can be accumulated easily, and watching it build can be pretty disheartening. As a result, some people feel like they can’t get a handle on their growing debt and fear that it will follow them forever.
If you’ve ever felt overwhelmed by debt, don’t be intimidated—there are plenty of ways to manage your existing debt that take a little more effort than your monthly payments do. Keep reading for four simple ways to manage your debt.
Keep Detailed Records
Keeping updated records of all of your accounts—including amounts owed, interest rates, and due dates—will help you stay on top of your debt. If all of your information is compiled, you can see how much you owe in total and the breakdown of creditors simultaneously.
Revisiting your list as you make payments and reduce your debt will help you visualize the amount that you owe. If you have trouble controlling your spending, seeing the amounts listed could help you understand the impact of your habits. Alternatively, it could be rewarding to watch the numbers decrease over time.
If you have borrowed from several creditors over the span of many years, you may have a hard time keeping track of what you owe. You can corroborate your records by matching your information with that in your credit report if necessary.
Pay Attention to Payments & Interest Rates
If you are keeping track of due dates, you should be sure to make your minimum payment on time each month to help keep your debt under control. Late fees can prevent you from paying your debt off sooner and repeated late payments can affect your interest rate.
Further, be strategic about your payments. If you have multiple loans or credit accounts, try to make larger payments on those with higher interest rates first. If possible, you can even contact your creditor and lower the interest rate to help you lower your regular payments.
Many creditors and banks have online features that allow you to automate payments, meaning that you could set yourself up to never miss a payment as long as you have sufficient funds in your bank account. Look into setting up this feature if you are constantly forgetting to make manual payments.
Don’t Neglect Your Savings
One common mistake that people make is choosing not to save their extra money while they’re paying off debt. While numerous monthly bills can add up and larger payments have to come from somewhere else in your budget, never neglect to save entirely.
Without savings, an emergency purchase or medical expense could push you even further into debt. To ensure that you can always support yourself and make your monthly payments, cut out some frivolous purchases—like entertainment subscriptions and food delivery orders—and put that extra money into a savings account.
Seek Specialized Help
If you feel that your debt is unmanageable or you are no longer able to pay it, consider reaching out to an appropriate debt management resource. Depending on the type of debt that you have and your needs, you can find a credit counseling service or a loan consolidation provider that can simplify your repayment process.
Filing for bankruptcy is another option for more serious cases. Whether you are struggling to repay unsecured debt (like credit card balances and medical bills) or secured debt (like mortgage and car payments), you may qualify for some type of bankruptcy solution.
However, a bankruptcy case can have a long-term impact on your credit and it should not be planned or executed by yourself. A bankruptcy lawyer can help you come up with the right plan to eliminate your debt and give you a fresh start if your situation necessitates it.
Following these suggestions can help you manage your debt and develop good personal finance habits, taking some of the anxiety out of bills and balances. Stay on top of your records and payment schedule and you’ll be free and clear in no time!