How to manage debts

Managing your debt

It is obvious that we are getting in debt more than previous generations. Each of the American families are carrying five to twelve times their yearly household income as debt. There are a lot of research and theories why that is happening with findings ranging from the Americans urge for instant gratification to easy availability of the credit itself. So, no matter what is the reason and history behind it, you are in debt and you are realizing that you might need debt counseling or professional help in consolidating your debt and managing it.

Here are some advice on how to manage your debts:

1. Realize that you are in financial trouble and have an exact picture how much money you owe.  

Well, realization of your current situation is a good first step. You need to admit that you have trouble with borrowing too much money and spending more, than you can afford.

  • Sit at  your desk and make a revision of what credit cards, lines of credit,  unpaid balances, medical and other bills you have. 
  • Check your credit score and credit report. You might see a couple of surprises there, like the cell phone bill, that you didn’t pay as you switch to another service without staying with them for the length of the contract.
  • Note how many accounts you have and how much exactly you own on each card, loan or credit line.

2. Now, don’t panic and don’t ignore the problem. After learning how much you really owe may be depressing, but don’t give up! 

3. Target your most expensive card!  Make sure that you start repaying from your most expensive card, the one that charges  highest percentage on what you owe. Try paying extra on top of your minimum payment of the most expensive credit card. You can do it! Start with one, than as the amount that you owe on that one card diminishes, start paying on your other card that has high APR.

  • Note, that other method on managing your debt is to start from the lowest amount     owed, so you can move to your next credit card faster keeping your motivation and momentum. 

4. Talk to your creditors! 

Do everything possible to reduce your debt and percentage on it. Call your credit cards to ask for reduce your APR. Call collectors and work out the payment plan, that you can keep up with.

5. Stop the circle! 

Shred some credit cards, just leave one to use in case on emergency. Analyse your spending habits and develop a budget. Learn to live within your means or below your means.

And the last advice- Don’t worry it will be plenty of financial sunny days ahead of you!You will grow mature and learn a lot about yourself and the way you handle money. Enjoy little things in life and eventually you will pay your debt off and will be able to save money for the emergency and your dreams realization!

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