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As you might guess, there is no single answer to how you could do a better job of debt management. But here are six tips that could help
Analyze your spending
If you're having a problem with debt, the simple reason is that it's because you're spending more than you earn. So the first thing you need to do is analyze your spending. Keep track of all of your expenses for several weeks or, if possible, a month. Make a note of everything you spend money on right down to that morning latte. You could do this the old-fashioned way with a pen and notepad or the new-fashioned way with an app on your smart phone.
Categorize your expenses
Next, divide your spending into logical categories. This could include food, entertainment, insurance, transportation, medical bills and so forth. This exercise alone could show you where you're getting into trouble with debt.
Create a budget
Now go back, scrutinize each of your categories and determine where you can make cuts. This will be the basis of your budget. The goal is to reduce your spending to less than your earnings so you can stop accumulating new debt and begin paying down your existing debt.
Shred all your credit cards – but one
If you have multiple credit cards, you need to shred all of them except for one. You don't want to close the accounts because this would have a negative impact on your credit score. The reason why you would keep one is for emergencies.
Transfer your balances
After you shred your credit cards, you might want to transfer their balances to the card your keeping – especially if it has a lower interest rate. It's just much easier to manage one credit card than several because you’ll have only one payment to make a month. Plus, if it has a lower interest rate than your other cards, your one monthly payment should be less than the sum of the payments you've been making.
Get a debt consolidation loan
If you have unsecured debts other than credit card debt, you might consider consolidating all of them with a loan or via consumer credit counseling. Do you own your own home? If so, you should be able to get a home equity loan or refinance your mortgage and use the money to pay off all of your debts. Today's mortgage rates are at just about an all-time low so your best option might be to do a refi. If you don't own your own home, you may find it more difficult to get a consolidation loan but it is still possible.
Sign up for credit counseling
Another popular option for getting debt under control is to go to a credit counseling company or agency. You would be assigned a counselor who would review your financial situation and help you develop a payment plan that could get you out of debt in about four to five years. Once all of your creditors agree to your payment plan, you would consolidate your debts in that you would no longer have to pay them. Instead, you would pay the consumer credit counseling agency once a month and it would pay all of your creditors.
Have your debts settled
The one downside of the of the debt management suggestions you have just read is that none of them will reduce your debt. They are ways to get debt under control but you will still owe what you owe. In comparison, if you let us handle your unsecured debts we can actually settle them for probably 40% to 50% less than you owe to help you get out of debt in 24 to 48 months. Call us today or start a chat to learn more about debt settlement and why it's become the preferred choice of many American families looking to do a better job of debt management.