Everyone with even a little bit of debt has to manage their debt. If you just have a little debt, you have to keep up your payments and make sure it doesn’t get out of control. On the other hand, when you have a large amount of debt, you have to put more effort into paying off your debt while juggling payments on the debts you’re not currently paying.
Decide Which Debts to Pay off First
Paying off credit card debt first is often the best strategy because credit cards have higher interest rates than other debts.1 Of all your credit cards, the one with the highest interest rate usually gets priority on repayment because it’s costing the most money. Use your debt list to prioritize and rank your debts in the order you want to pay them off. You can also choose to pay off the debt with the lowest balance first.
How does debt management work?
Debt management plans are meant to address unsecured debts like credit cards and personal loans. They can work in one of two ways. The first way is a DIY version of debt management. In this version, you create a budget for yourself that will allow you to pay off your debts and maintain your financial stability. You can use budget calculators, repayment calculators and financial management apps to help keep you on track. If need be, you can also do some negotiating with your creditors to try and lower your monthly payments or interest rates to help you decrease your debt. Once you have gotten the debt under control, you can decide if you want to keep or close an account.
Managing Your Debts Wisely Means Getting Ahead in the Long Run
The debate about “good” and “bad” debt aside, debt is often considered “normal.” Regardless, it can (and should) be part of an overall money management strategy that helps you prepare for a debt free future. By planning ahead, informing yourself, actively using a household budget, only borrowing when it makes sense to borrow, and setting yourself up to successfully deal with bumps in the road you’ll be in a great position to avoid money worries and stress. After all, and it’s true of debt management as well, failing to plan is planning to fail. We’re here to help if you’re not sure where to start…but don’t delay; you’ve got nothing to lose but your debt.
