The majority of adults will have to deal with managing their debt at some point in their lives. Accumulating owed funds will often see those same people turn to others for assistance in order to remain somewhat in control.
Some will look into informal solutions to control their debt, in order to address the size of their cumulative balance. In cases where there is an expectation of that balance spiraling out of control, and Debt Management is a priority, a Debt Management Plan might be the answer. Prior to this, however, there are a few simple things someone in debt can do to get a hold on their finances.
Find out how much you owe & who you owe to
In order to know just how much you need to pay, it is advisable to work everything out on a spreadsheet or simply by hand. List the debts according to the creditor, outstanding balances, current monthly payment and the dates that each payment is due. If you are struggling to find this information, request a copy of your credit report. All of the info you require will be available here.
Prioritise outstanding debts
Once you have determined how much you owe, it is good practice to prioritize debts according to importance. Figure out what debt needs to be addressed first according to the interest rates, any potential defaults or legal action which is threatened etc. The debts which will affect you the most should be prioritized first, where possible. This is among the best tips out there for developing good personal finance habits.
Pay bills on time
An important part of managing your debt is ensuring that you give yourself a chance to do so without incurring any more. Avoid late payment charges and fees by making payments on time – or where possible – earlier than the due date. Your interest rate can also increase if you miss two payments in a row, so it is important to stick to a routine in order to ease the pressure on your ability to bring your debt down to manageable levels.
Create a monthly budget
If this isn’t something you do already, then create a monthly budget as soon as possible. Having a clear understanding of your incomings and outgoings will make debt management easier. You can assign a percentage of your income to outstanding debts, and also manage your money better thus avoiding the accrual of any further debt. A monthly budget will also help you keep track of your finances, in general, and it promotes healthy habits with money.
Know when it is time to seek help
If you are drowning in debt and want nothing more than to bury your head in the sand, it may be time to seek help. There is no shame in asking for assistance. In fact, it could save you a whole host of problems in the future. As with most things deemed problematic, “nipping it in the bud” prevents further issues which could spiral out of control. If you are struggling, ask for help. Don’t just hope that it will go away because it won’t.