Debt Management Advice That Will Change Your Life

debt management advice

It is common for people to be unaware of their exact financial position and how much debt they have in total. Understanding the real cost of the debt you have and exactly what you are spend your hard earned money on is the best debt management advice that you could follow. With some work you can understand your financial position and then make informed decisions about your future.

Some Useful Advice on Managing Debt

The first place to start is by sitting down and collating all of your bank statements, loan accounts and credit card statements. This will allow you to identify the total amount of debt that you have as well as the monthly payments that you must make so that you do not go into arrears.

When you understand your financial position then you can look at any accounts that are in arrears because it is vital that you keep up to date on your payments so that you do not incur penalties such as extra fees and high interest rates. These can severely impact your financial situation and may trigger other lenders to increase their interest rates because you are identified as having extra risk.

If you have decided to see a financial counselor then having all of your information will make it easier for you to copy them so that you can keep the originals and they can use the copies to calculate your position and offer debt management advice. Make sure you have the latest statements and any letters, default notices or late payment notices so that the counselor has the most up to date information and can give you the right advice.

  • Debt Tip #1 – Remember that your credit card limit is not extra ‘free’ money that you can spend. If you do not budget for the extra amount you need to pay then you can find yourself with a debt problem
  • Debt Tip #2 – Make a budget that lists all your income and all your expenses and payments. This not only makes it easier to understand your current position but also makes it easier to understand what will happen if you get in more debt or pay off debt.

Advice on Tracking Spending To Help Managing Debt

It is amazing what we can get into the habit of purchasing every day and the amount that these small items can add up to over a month. It is a great idea to keep track of every purchase you make so that you can see exactly what you are spending. The best way to do this is to just add every purchase into a note on your phone and then total them up at the end of the day.

It is not uncommon to have a coffee on the way to work a couple of snacks during the day and a couple of drinks on the way home. These obviously vary as everyone is different but a daily spend of $10 to $20 on incidentals is common and over a month they can mount up to a very large amount.

This can be even worse if you are using a credit card to pay for all these minor expenses because you will have to pay interest on the amount if not repaid in the no interest period. If you are having debt problems then you can make a few changes and pay down your debts. This includes such things as buying bulk snack packs and taking them to work instead of using the vending machine and taking a travel cup of coffee from home instead of getting a very nice but very expensive coffee from the trendy chain store.

  • Debt Tip #3 – Be wary of interest free claims many have a sting in their tail if you are late or miss a single payment. Penalties and interest can add hugely to repayments.
  • Debt Tip #4 – If there is a problem and you are in financial difficulty then ignoring the problem is the worst thing to do. Contacting your credit providers early will help them to offer you solutions and stop penalties and defaults.

If Things Are Bad Get Independent Debt Management Advice

Ignoring a debt problem is common and when things come to a head it can be difficult knowing who to turn to. An independent financial adviser that you pay to see or are provided by charities and financial counseling services are the best people you can seek out. Family and friends can emotionally support you but you need expert advice from someone that is only concerned with helping your financial situation.

The advisor gives debt management advice everyday and knows what the companies will and won’t do. They will help you understand your financial situation and what options are available for you to move forward.

  • Debt Tip #5 – Starting the credit card shuffle where get a new credit card to so you can pay your existing card is asking for trouble. If you are considering this then you need debt management advice and should consult a financial advisor.
  • Debt Tip #6 – The best way to become debt free is to cut your spending as much as possible and pay your highest interest rate debt off as soon as possible. When that is paid move on to the next debt.