Managing your debt or credit is not an art as such, but over time we have seen various strategies been developed to deal with them. A good strategy will fit in your financial situation and your future plans will evolve around it. Getting out of debt is an important priority that many aim to achieve, however they never seemingly do! Normally that is one the top most goals at the beginning of the year!! To achieve this goal what are needed are strategies and an dedication to follow them. A strategy offers a particular method to attack a problem. Here are a few strategies one can apply to their own financial situation.
One Debt at a Time
Juggling with many debts can turn your good credit into a bad one. Since you are focused on paying all of them, you won’t be able to make the minimum payment for all. Shift focus on paying the total balance on one card at a time. So which debt do you choose? Using an interest calculator, find out which debt has the highest interest rate over a period of time and focus on that first.
Another option is to focus on the smallest debt payment since you can take care of it quickly.
Pay More than the Minimum
The usual understanding is that you have to make the minimum monthly payment. This doesn’t mean you can’t exceed the minimum payment. Pay a bit extra with every minimum payment. This allows you to pay off your debts fast and prevent the interest from piling up.
Consolidating Your Debt
This is like a combine and conquer strategy. Combine several of your high interest debt into one with a lower interest rate. This is a fantastic way to lower the number of debts on you. You can pay your debt faster and a low interest rate means the debt amount won’t increase too much.
Make use of the balance transfer rate to move debt off the high interest credit cards. However, you’ll have to factor in transfer fees in this method. Another option is to use your home equity and utilize it as down payment on your debt. An added advantage to this is that home equity interest payments are mostly tax deductible.
Start Tracking
Creating an account is the best strategy to apply to understand your own financial situation and rein in any debt. It will help keep track of your spending and help in preventing you from over spending. You can identify areas you can save money on and improve your savings.
Create an separate savings account
The best way to manage credit card debt from piling up at the end of the month is to set up an separate saving account. The day you use the credit card, that evening go and transfer the amount, you spent, into that savings account. So when the credit card payment is due, you have the money to pay. That will help from prevent you from getting into new debt and also good credit while working on existing strategies to get out of debt
More complex the strategy, the more ways you can deal with debt. Try applying two or more of these together. See which one will work for your financial situation.
If your debt is still not manageable then you will require professional help who can guide you on what to do. You can also find them on our services page on our web site.
