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How To Manage Debt The Smart Way

Updated on January 6, 2014

In a perfect world handling personal finances would require little more thought then see it, buy it, work to earn more money and repeat. In reality however the smart way to manage debt takes a bit more creativity and discipline, encompassing a number of key components if any chance of success is to be achieved. Managing debt is far more than just earning more and spending less, although this is a good basic starting point to launch an initial strategy. To keep debt from getting the better of you demands constant attention directed toward every expenditure, understanding that $5 or $10 saved here and there on interest and payments results in a neat little bundle of money in your hand at the end of the month.

Managing debt the smart way begins with an objective assessment of your present financial status - what you earn, what you spend and where you spend it, and determining what is a necessary expense and what is not. Once debt is separated in this manner it becomes much easier to discover ways to reduce expenses without a total upheaval of your present lifestyle. It will also become painfully clear as to the amount of monies spent monthly on interest, credit card fees, late payment fees and over-balance costs. This is the single area where most people make the greatest mistakes when they attempt to handle debt, and it is also the area where you can make the most rapid and effective impact.

Investigate the possibilities of getting a debt consolidation loan to make managing debt less of a hassle and much less costly in terms of interest rates. The concept of debt consolidation is little more than placing the total of your outstanding debts into one neat pile that is usually configured at considerably lesser interest than what is presently being paid on your outstanding balances. In this action you can pay off the debt that is killing you financially every month with outrageous fees and find an avenue to move forward and keep more of the money you earn.

If you find that a debt consolidation loan is not an option, you can manage debt the smart way by transferring balances from a high interest credit card to one that is lower. This not only reduces the amount of interest paid monthly buy enables a consumer to avoid paying annual fees to 5 or 6 different credit card companies. Use your head when money is tight and you are scrambling to meet all of your financial responsibilities - it's a more prudent move to pay a utility bill 2 weeks late with a $10 late fee assessment than to pay a $30 late fee to a credit card company and another $30 over the balance limit fee for want of a few extra dollars. When the wolf is at the door and no other option is at hand, rob Peter to pay Paul but make sure Paul gets his cut as quickly as is possible.

Lastly, a smart way to manage debt is to keep a limited amount of cash on hand at all times. This avoids the need for credit card use a great deal, reduces the number of impulse purchases that are not within your budget and eliminates convenience fees charged by out of network ATM locations.


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    • thom w conroy profile image

      thom w conroy 5 years ago

      Thanks so much for the comment, I find these things work fairly well - at least they have for me.

    • teaches12345 profile image

      Dianna Mendez 5 years ago

      Good tips for managing debt. I find that keeping less cash on hand does prevent you for those unnecessary purchases. Thanks for the education and advice.