Debt Management Tips

Of course, the best debt management tips are never to incur any debt.

Shakespeare said, "Neither a borrower nor a lender be," but then, William didn't live in this plastic millennium. Today, few of us have ready cash available to buy a house, a car, appliances, a new computer, or any of the items that are an integral part of our lives. So, we become borrowers through bank loans, student loans, finance companies, and credit cards. Then we face the problem of personal debt management.

Know before you owe
Modern debt management is more than just paying your debts. Personal debt management is walking the fine line that ensures you have credit available the next time you need it. In fact, the best tip to manage debt is to begin debt management before you become a borrower.

  1. Track your money. Know how much you have and how much income you can reasonably expect in the near future. Know what your monthly expenses are and what you'll have left to pay creditors.
  2. Save before you borrow. Although that's not always possible, it is possible to build a money reserve that can cover several months' expenses if you run into financial problems.
  3. Investigate before you borrow. Look at borrowing as "buying money". Comparison shop to find the best money bargain available whether you're shopping for money through a bank, a finance company, or applying for a new credit card.
  4. Beware of the large print! Nothing down, no-interest or low interest may look attractive but such offers frequently are filled with fees and penalties that can turn ugly if you get in a pinch. Always read the fine print!
  5. Have a personal debt management plan in place to pay back before you borrow. The easiest way to lose control of your money is to let your lender make the decisions about your monthly payments. This is especially true for credit card debt.
    • Keep records of credit card purchases, what you bought, the date of your purchase, and a plan to pay for the item(s).
    • Although you are usually required to make a minimum monthly payment, set a goal for paying off your highest interest debt as fast as possible e.g. credit card debt, payday loans...
    • Pay up small credit card purchases monthly. Sale items are no longer bargains when interest accrues to the sale price.

  6. Prioritize your debts.

  7. Know your rights as a debtor. If you live in the US, the Federal Trade Commission (FTC) is an excellent resource both to help you manage your debts and provide you with valuable information should your debt spin out of control..
  8. Just because someone has written a book, an article, or has a debt-related web site doesn't mean they are an expert on personal debt management. Do "comparison shop" for debt management advice with the same care you shop for money to borrow. Find several opinions that match up with the opinions of others.
  9. Debt management advice isn't written in stone. Modify personal debt management tips and advice to work with your budget and your situation..

"I would gladly pay you Tuesday for a hamburger today."

Remember Wimpy from the old Popeye cartoons? Even if you've never seen the cartoons, that phrase probably has a familiar ring to it. The "charge it and owe it" cycle can take a vicious backwards spin until your cash only goes towards paying for yesterday's groceries. However, you don't have to be Wimpy to manage your finances. Following a few practical debt management tips will help you always to have cash available for your burgers!

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