Manage Your Debt Wisely

Probably the majority of people in the world have debt of some sort or another, so managing debt is a must. Knowing how to manage your debt successfully includes making timely scheduled payments of at least the minimum amount.

So are you unsure of how to manage your debt? Keep reading for tips and ideas to help.

To Whom Do You Owe Money, And How Much?


If you want to know how to manage your debt, you must first know who it is you owe money to, as well as how much. Keep a record of your total combined debt, the amount owed to each creditor, the minimum amount due, and the due date. Then list your paydays and the amount you plan to pay (if more than the minimum) that month. Amend your checklist from time to time after paying off bills or accumulating new ones.

Be a Good Debtor

This rule regarding how to manage your debt is plain and simple-pay the minimum amount of each of your bills on time every month. Being consistent with these actions will pay off in the form of lower interest rates and avoidance of late fees.

If you use an electronic tracking system, make sure to alert yourself a couple of days prior to the due date. If you realize you missed your payment, do not delay sending in your payment until the next month! Doing so could rack up fees, interest, late charges, and make your credit score plummet. Additionally, contact your creditor as soon as you observe the missed deadline. Many times creditors are willing to extend a one-time forgiveness of a late payment. They will remove the late fee so that your balance does not go up, and your credit history is not negatively affected.

Calendar It

If you are unsure on how to manage your debt, then create a calendar, whether on your Smartphone, tablet, computer, or by using the good old-fashioned pen and paper. As mentioned above, make note of the due dates of all your bills, as well as when you will receive your paychecks. This will help you plan ahead for the expected inflow and outflow of your money. If your paydays fall on the same day every month, it is acceptable to use the same calendar repeatedly. However, if your paydays fall on different days every month, it would be helpful to use a separate calendar for each paycheck.

Pay the Least Possible Amount, If Necessary

In order to make real progress towards paying off debt, it is necessary to pay more than the minimum amount every month. However, if this is not a possibility, at least pay the minimum amount to avoid late fees, over limit fees, and possibly going into default.

Choose What Creditors Get Paid Off First

Often times the best way to pay off credit cards and other debt is to pay off the debt with the highest interest rate. Since you will be paying more overall with these accounts get rid of them first.

Another approach is to pay off the account with the smallest balance first. This is often helpful in achieving a sense of accomplishment after seeing more and more debt repaid.

With both approaches, after one account is paid off, add the minimum amount you were paying to the new-targeted account. So, you will pay the minimum amount on the new account, plus the minimum amount you were paying on the paid off account. This is a domino effect that is very motivational for debtors.

Pay Accounts in the Collection Process and Write-Offs

The next accounts to tackle are the accounts that have already been sent to an outside collection agency, or have been written off by the original creditor as an uncollectible bad debt. However, be careful not to fall behind on your accounts in good standing while attempting to pay the ones in bad standing. Be advised that creditors will continue their efforts to collect on the amount past due as long as there is an outstanding balance.

Maintain a Reserve Pool of Money

Maintaining a generous amount of savings is essential to financial health. Health emergencies, vehicle problems, and pop-up home repairs are bound to happen. However, if you have a good amount of money saved up for just such occasions, it will not be such a financial blow to you, as you will not have to borrow more money to pay for the unexpected expense. It is a good idea to maintain a minimum of six months’ expenses saved in case such emergencies happen. And, take baby steps. Make a goal to first save $500. Then, once you have reached that goal, move towards a new goal of saving $1,000. After a while of doing this, you will have the necessary savings built up in case of emergency, along with the confidence of knowing how to manage your debt.

Make a Financial Plan and Stick to It

A sound financial plan makes sure that plenty of funds are available to account for all your bills for that pay period. Forecast a budget ahead of time, and that way you can adjust your budget where there will not be sufficient funds.

Admit When There’s a Problem

Debt can get out of hand quickly and leave you feeling like you are spiraling out of control. But don’t be ashamed or afraid to reach out for help. There are choices for repayment of your debt. Consider the pros and cons to each of these choices so do your research and compare your alternatives to help make a wise choice for your particular financial situation.

Also, remember that there are many resources on how to manage your debt.