Are you looking for new ways to manage your debt? Maybe you have found yourself in debt for the first time and aren’t sure what to do? Perhaps you have decided now is the time to take control and manage your debt properly? Whatever your reason might be, we have the answer for you!
We know how stressful debt can be. Those nights where you lay awake wondering how you will pay off the debt and if there will come a time where you will truly be debt-free. These thoughts terrify most of us, and we find ourselves feeling hopeless against mounting debt.
Well, no more! Today we are here with ten tips to manage your debt and help you get back on track! Keep reading to find out more
Ten tips for managing your debt
Below are our ten tips for managing your debt. You can use one or a combination of these tips to manage your debt better. Keep reading and find the tips that best suit you today.
Write down your debts and what they cost you.
The first step to managing your debt is understanding how much you have and what it costs you. This can be a daunting task, but the sooner you do it, the sooner you can manage your debt in the best possible way.
Write down your debts and the interest you are paying on them. Doing this will help you decide which is the most expensive or important debt to sort first. This step is the first one to take when it comes to taking control of your finances.
Prioritize expensive debt
If you have several debts, you want to prioritize them. The most important debts, like energy bills, will need to be paid first to prevent losing access to your supply. When managing your debt, you still need to keep a roof over your head!
Next should be debts with the highest interest rates. The longer you leave these to be paid off, the more interest you will incur, meaning the debt will cost you more. Start by tackling and clearing this debt before those with lower interest rates.
Consolidate your debt
Where possible, take out a loan that will allow you to consolidate your debt. If you have a decent credit score, look for a credit card with 0% interest on balance transfers. You can transfer your existing debt onto this card and pay that monthly instead.
You will save money as you won’t be paying interest charges, meaning you can clear through your debt at a quicker rate! You can transfer any remaining debt to another interest-free credit card until the debt is cleared when the interest-free period ends.
Reduce the number of credit cards you have
Once all your debt is transferred to one credit card, it’s worth canceling your other cards. Doing so removes the temptation to spend on these cards, saving you interest charges down the line. It can also boost your credit score as one card you pay regularly and on time is better than 3 or 4 maxed-out cards you can’t pay back.
Cut up the credit cards and call the company to close the account and cancel them once the debt is moved.
Create a spending plan
Spending plans will differ from person to person, but knowing your disposable income after all your essential expenses can be helpful. See where you can cut down on your spending, whether it’s one less Starbucks or home workouts instead of the gym. This money can then be used to build up savings, so you don’t need to use credit cards or can go towards paying off your debts.
Get help when you need it.
If you are struggling, be sure to find a debt charity that can help you. There are plenty across the country that can offer advice for free and help you better understand your debt, and they can also help create a debt management plan if your debt is complicated.
Pay your debt on time.
It might seem trivial, but a good way to manage your debt is to make all your payments on time. Even if it’s just the minimum payment on a credit card, paying it on time avoids late or missed payment fees. Over time they can add up and be added costs that are easily avoided.
Set up direct debits or reminders on your phone to ensure you don’t miss a payment.
If you can, pay more.
While the minimum payment is fine to make (especially if it’s all you can afford), paying more will help cut through your debt quicker. Paying more than the minimum payment means you are charged slightly less interest, saving you on additional costs while paying back your debt. It’s not a viable option for everyone, but pay a little more and watch your debt drop if you can afford to.
Create an emergency fund
It can be hard to do when in debt, but if possible, put a little money aside every month. Doing so will create an emergency fund that you can fall back on instead of relying on your credit card. Even if it’s just enough for some groceries one week, having that buffer, there can be a lifesaver when things go wrong!
Carry cash
Instead of relying on your bank or credit card, start to carry cash instead. This can help you to budget clearly and avoids overspending, which can land you in more debt! Withdraw the cash budgeted for the week and only spend that; once it’s gone, it’s gone!
The visual tool of handling money can help keep you off your credit card and budget better.
Final word
And there you have it, ten tips for managing your debt! You can use one or a combination of these tips to manage your debt better and hopefully pay back your debt quicker. Remember to speak to your lender or a financial advisor if you have any issues, as they will provide you with tailored advice.
