Tips For Debt Management
Let's face it, debt is a difficult subject to tackle. According
to multiple sources of data, the American consumer can eliminate
ALL forms of debt, including mortgage debt, in 7.5 years,
provided he/she use only the money earned. However, in order for
this to work, one must be committed to either pay down the debt
manually, or subscribe to a debt consolidation program to reduce
one's budget. The program may seem drastic, but so are the
results! How badly do you really want out of debt? Follow along
for some solid debt management advice.
Debt Management Preparation
Pull together your most recent six months worth of receipts (if
you don't keep receipts, start doing so now). Don't bother
gathering tax information (you'll be paying that no matter what)
and household utilities (ditto). Be mindful of your credit card
bills, and make use of their categorization (auto, grocery,
food, etc). If your bills aren't categorized, categorize them
yourself. Next, you'll need to think of some ways to save money
on EACH category, at a goal of 10% savings per category. This
savings will become your "nest egg?of sorts under the debt
management plan.
Debt Management Execution
In a spreadsheet or a piece of paper, list each bill, category,
payoff amount, minimum payment, and APR.
Next, determine which bills are taking the most money away from
you, and eliminate those bills first. For example, Visa bill at
18.99% interest takes precedence over the 9% auto loan. This is
not to say that the auto loan should be ignored. Rather, the
minimum payment should be made on the auto loan (and all other
bills) while the remainder of one's "nest egg?should be applied
to paying off the Visa bill. Percentages will forever rule your
life if you are in debt; turn the table and rule them.
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