Managing ones
debt is critical. Debt management teaches you how to handle your personal
finances. Here are five important principles to use in learning how to best
manage your finances.
1. Meet with a Reputable
Debt Management Counselor
Sometimes we
can’t see the forest for the trees. This idea is particularly true with respect
to our personal finances. Getting an outside, objective view of your current
financial status is very important.
A good debt
management counselor will review your current financial circumstances and help
you develop a plan to pay off your debts. You can expect honest and frank
feedback. Anything less would not help you.
Your
relationship with a debt counselor is important. If you feel at ease in
talking, you’re more likely to openly discuss your needs and personal problems.
However, keep in mind that you probably won’t like everything you hear. Nevertheless,
when you know heshe has your best interest at heart, you’re more likely to
follow the advice you get.
You should
talk with several different counselors. Learn as much as you can. Find someone
that really listens. If possible, talk with someone that has worked with the
counselor. Get information on what the counselor has done to help other people.
Don’t be afraid to ask specific questions: What will the counselor will do?
What will you be expected to do? How much it will cost? How long will it take?
Once you’ve
found a good debt management counselor with a proven track record, commit
yourself to listening to and applying the advice you receive.
2. Make Debt Reduction
as a Priority
Every debt is
different. You have different amounts to pay. The interest rates vary. It may
not make any difference on how you decide to tackle your debt. The most
important point is that you focus on paying off your debt.
Once you’ve
gotten some good advice from a debt management counselor, together you can
determine the best way to pay off your debts. You should feel good about your
financial plan. Each time you pay off a debt, you will feel better. Each time
you pay a debt, you are one step closer to financial freedom.
Make paying
off your debts the biggest priority and you will soon be on the road to a debt
free life.
3. Follow Your Budget
Plan
One major key
to success in debt management is establishing and following a budget. Your
budget should allow you enough money to pay your debts and still have your
necessary living expenses. The closer you follow your budget, the more likely
you will succeed in becoming debt free.
Success comes
by consistently paying your debts. If you pay your debts first, then you know
exactly how much money you have to live on.
Be sure to
record and document each transaction. It doesn’t matter what method you use to
keep track of your payments. You can write them in a checkbook ledger, put
money in envelopes for each budget category or enter each transaction into a
computer program. The real key is to know exactly how much you spend in each of
your allocated budget categories. When you’ve spent all the money for a given
category, you’re done for the month.
4. Tear Up All Your
Credit Cards
One of the
biggest reasons people accumulate so much debt is the use of credit cards. It’s
easy to charge something. You don’t have to pay cash. It’s like the old saying
“Out of sight, Out of mind”. If you don’t see the money going out, you’re not
as aware of you spending.
Your debt
management counselor has many more resources than you do. They can make
financial arrangements with your creditors to lower your payments and interest
rate. In most cases, you will have to agree not to accumulate any more debt.
Tearing up
your credit cards takes away the temptation to increase your debt. It’s easy to
say something doesn’t cost that much, so a little charge here and there won’t
hurt. Don’t deceive yourself. That’s how people get into financial problems in
the first place… Get rid of the credit cards. Pay cash or pay nothing.
5. Become More Conscious
of Your Expenditures
When you
become acutely aware of where your money goes, you can begin to reduce or
eliminate unnecessary expenditures. You’ll begin to develop new and improved
spending habits. Ask yourself. What is my most expensive bill? Is it heating?
Is it air conditioning? Is it water?
Next, become
aware of what you do each day. Do you leave the lights on when you leave a
room? What do you do when you leave the house for several hours? You may think
that turning down the heat or turning up the air doesn’t save much. That is
true. Nevertheless, if you do it everyday, those little savings begin to add
up. Just think of it as your personal savings plan. The less you pay, the more
you have to spend in other places.
Small expenditure
reductions over time add up to big savings. Become more conscious of where your
money is going.
Learning and
applying good debt management skills will make all the difference in your life.
Once you have paid off your debts, you’ll be in total control again. You’ll
never want to repeat the experience again. Say goodbye to bad debt management
forever.
More debt
management tips can be found at www.ezmortgagecalculator.org.
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