How To Manage and Pay off Debt
Managing your debt can be a useful tool for dealing with your debts, but it doesn’t stop your bills from coming.
In order to manage your debt, you can use the Debt Snowball Method or work with a credit counseling organization. In either case, there will be an individualized plan that fits into your budget and financial situation, but sometimes it can be helpful to have an outside partner providing help or accountability.
Debt management is also a way to get your debt under control through financial planning and budgeting and is a key to financial freedom.
Before you start paying off your debts, take a moment to think about what kind of loans these are - whether they're credit card bills or mortgage payments.
Does any part (or all) of your credit card balance qualify as "good" debt? This could include medical emergencies like hospital bills; utility payments such as cell phone bills.; educational expenses.
Tips to pay off your debt:
1. Create a budget - To manage your money more efficiently, consider using a budgeting app. By tracking the flow of both income and expenses you can stay focused on paying off debt by making wise decisions for each dollar that comes in or goes out.
2. Pay your bills on time each month - Late payments can have a serious impact on your ability to pay off debt since you’ll be charged interest for every missed payment. Missing two consecutive ones means that both rates and finance charges will go up, so avoid delays at all costs.
3. Pay more than the minimum balance - Making the minimum payment is better than not paying anything at all. Making just one extra payment can save you hundreds in interest charges over time.
4. Lower your bills - Achieving your goals takes a commitment, and one way to make sure you have enough cash in hand for when that time comes is by cutting spending every month.
5. Pay off collections and charge-offs - When you have limited funds to repay debt, it is important that the debts with higher interest rates are taken care of first. Keep an eye on your positive accounts and don’t sacrifice any for that past due or otherwise negatively impacting ones like credit cards which will only affect future financial prospects if left unpaid.
6. Increase your income - Side hustles are a great way to make some extra money. You can find one that suits your schedule and interests, either online or in person.
7. Consider debt consolidation – This can lower your interest rate so you’re putting more money toward your balance, and allows borrowers to repay their debt to a single loan with one monthly payment.
Understanding these details can help you come up with your personalized plan for paying off your debt.
