Simple Debt Management

Debt isn’t all bad. If we didn’t have options for debt most of us would not be able to purchase a home or have the credit available for emergency situations. Debt is there so that we can purchase things we both need and want but if we let it get out of hand then it can take over our lives and leave us with little in the way of progression and significantly ups our chances of getting into credit trouble. Good debt management can help you get the extras you may not otherwise be able to get, if you are responsible with it.

The key to good debt management is starting out good. While this isn’t realistic for those of us who already practiced bad debt management, if you are just starting out you can save yourself a lot of heartache, and money, if you practice responsible spending habits from the start. If you are coming to good debt management late, like my husband and I did, then make changes now, don’t put it off any longer.

* Search for credit cards that do not charge an annual fee. You may have to do a little research if you have little or no credit history but it will be well worth it in the long run. These fees can cost you $50 a year so finding credit cards without them will save you a great deal of money.

* Look for cards with the lowest interest rate. While you may not be able to get the best interest rate when you first begin to get credit, after six months to a year of paying on time you should be able to look for a lower interest rate card. Once you have the low-interest card, quit using the high-interest card but do not close the account as closing the account would have a negative impact on your account.

* Try not to carry a balance. You should pay your balance in full each and every month, if you cannot then put all of your extra to it so that you pay it off within a few months. If you use your card for a same as cash deal then make sure that you pay it off before the interest comes due.

* Set up a savings account. Just a few hundred set aside in a savings account can help you in most emergency situations such as needing a new tire for your car, especially if you then don’t have to charge the bill and pay interest on it. The best savings account will have at least three months worth of income saved so that if you lose your job you have time to find a new one and keep up with your bills but having something is much better than having nothing.

* Save for items. This is a hard one for many of us as we live in a society where we get what we want when we want it. Saving for the things we want will not only save us money but it will also help you feel better when you have a piece in your home that is paid for instead of a piece that you owe money on.

* Stay on top of your debt. If you find you will not be able to make a payment or payments then call your creditor immediately. Some will let you skip one payment while others may lower your payment in order to help you continue making payments. Don’t make it a habit. Make sure that you call because if you ignore your bills they will just get worse.

Life is easier when you practice responsible debt management. Keeping your credit good and paying your bills will actually allow you to have more in the long run.