6 Steps to Manage Your Debt No Matter How Much You Owe
Everyone has debt but for some Americans, the overwhelming numbers cause them stress and sleepless nights. Credit is important and with an accumulation of debt, it’s hard to get. On the other hand, getting into debt is fairly simple and takes just one financial crisis to sink you. Follow the six steps Rate Rush if you want to get out of debt. No matter how much debt you’ve accumulated, these strategies work to reduce and eliminate the debt that you owe.
1. Know How Much Debt You Owe
Make a list of your debts. List the creditor and the amount of the debt. Request a copy of your credit report to gather this information. You’ll be more aware of your debt when you see the complete picture. The list can help you pay off debt, decide which debts to pay, and better manage the debt that you accumulate. Update your list with every change so it reveals accurate information.
2. Pay Your Bills on Time
Late payments add up. A few bucks here and there equals a nice chunk of change at the end of the year. Late payments also increase interest rates and finance charges if you miss two in a row. Report to the credit bureau. Use a calendar to keep track of patent due dates to avoid late payment fees and potential interest rate/finance charge increases.
3. Create a Payment Calendar
Many people pay bills late simply because they forgot that it was due. Create a payment calendar so you never forget another date. Write down your pay dates on the calendar. Use the information to schedule payments so they coincide with your pay dates. Payment calendars alleviate late payments and late fees while they simplify life.
4. Make the Minimum Payment
Make the minimum payment due each month if you cannot afford to pay more. Making the minimum payment won’t help reduce the total debt owed, but it does prevent late fees and potential risks to your credit score. It is difficult to catch up when you get behind. Make the minimum payment so you do not.
5. Choose Which Debts to Pay Off First
Pay off credit card debt first. Once you’ve paid off the debt, stop using the card. Credit card debt usually carries higher interest rates than other debts. Make the card with the highest interest rate your top priority on repayment. Once credit card debt is paid off, work on other high-interest debts. Car loans and mortgages usually follow the pay-off plan for most households.
6. Create an Emergency Fund
Loss of income can devastate a household without an emergency fund in place to safeguard them from such danger. Start saving now for that emergency fund. Aim to save at least $1,000, although the more money available, the more expenses you can cover in the event of job loss or other financial crisis’.
7. Seek Debt Help
If you find it hard to stay on top of your bills each month or have fallen into debt, get help from a professional debt relief company. The faster you seek debt help, the sooner you’ll get out of a financial crisis. Other signs that you could use help from a professional agency include:
- You pay late fees on your bills each month, especially if you pay multiple late fees
- You’ve missed two or more payments and rates have increased
- You pay more than 20% of your take home pay to debts each period
- You dip into savings to pay your bills on a regular basis
- You do not have an emergency fund or the available funds to start an emergency fund.
With time, patience, and the right strategy, getting control over debt is possible. The ideas above are among the steps that can help pave the path to financial freedom. Use these strategies wisely and overcome debt no matter how much money you owe to creditors.