Not many years ago, it was believed that all credit and loans are for impatients, who can’t wait to afford things themselves. Rather than buying a car on a car loan, it was considered preferable to wait for the time when one could afford such things. However, in today’s life, when ever yday a new product is hitting the market, it’s difficult to resist the temptation. Many of you must have watched the movie Confessions of a Shopaholic, a story of a girl, who spends and spends thousands on scarves, gloves, boots, and whatever fancies her eyes. But then she ends up in thousands of credit card debt! With no alternative left, we see her running away from creditors. With just a swipe of your card, you can buy anything you desire. However managing credit is not that easy. In the last few years, have you skipped making payments to your creditor or exceeded your card limit or running away from phone calls of your bank? If yes, then you are running under debt and need to manage them well to apply in future for loans and credits. Managing your debts is not difficult, what you need is just some planning to work well with the things. Here are few tips, which will help you in managing your debts.
How To Manage Your Debt
- Managing debt can’t happen overnight. So, the first step is to relax and refrain from looking for an easy-fix program, as they will result only in more financial woes. Your first step is to find out how much excess debit you are carrying. For this, what you need is your credit report. From a free credit report service, you can easily get a copy of your report. Your credit report will help you estimate, where you stand and what you need to do.
- Once you have decided to manage your debt then it’s important to make a debt payment plan. So, start with making a list of all debt that you have and then prioritize your debt. Rank the debts in the order that you need to pay them off. Some experts suggest that you should begin from smallest to largest debt as it gives you the sense of accomplishment and gets the momentum going. Whereas others recommend starting from higher to lower debt as it will help you to quickly pay off the debt.
- The next step is to get rid of the behavior, which led you into so much of debt. Get rid of debt by spending less. To keep a check on your debts it’s important to keep a check on your spending habits. Before buying that pretty new dress or before going for that new mobile phone, ask yourself, “Do I really need this?" You can go without a new mobile phone as it’s not a necessity. So, it’s important to prioritize your needs before going ahead with spending.
- To get rid of debt, it’s essential to make a budget and spend according to it. So, it is essential to cut down on unnecessary spending to make things fit in your budget. Start cutting from small things like eating outside to big things, like buying a new plasma TV. It is important to make these changes in your lifestyle so that you can save money and pay off higher interest debts.
- While making any purchases make all payments in cash as this will limit the use of your credit card and keep you away from debt. This will also act as a key to managing expenses well.
- As a rule, avoid using all available credit on your credit cards. Banks and lending companies want to be assured that you don’t rely on credit.
- Lastly, if you have trouble in managing your debts then you should find a good credit counselor. Often, ‘credit counseling’ and ‘debt management’ terms are used interchangeably. But they are not the same. Before committing to a debt management program, it’s a good idea to go for credit counseling. A credit counselor will help you make a budget and explore option like self-help method rather than just pushing you for a debt management program.