Whether you have a lot of debt or just owe a few dollars a month on a credit card, it is critical that you are able to pay your bills on time. If you cannot make a payment on time, you could be charged late fees or higher rates of interest. This could result in your debt getting even larger and becoming even harder to pay off. What are some good strategies to help you manage debt?
Create a Budget
A budget allows you to know exactly how much money you make each month and how much your monthly expenses are. However, on top of that, it allows you to figure out when each of your bills are due, which allows you to make your debt repayment plan weeks or months in advance.
For instance, if you know that there are five paydays in a given month, you can use that extra check to get ahead on a credit card or other debt. Over the course of a year, you may be able to get a week or more ahead on your monthly expenses. From there, you can start to pay down your debt balances as opposed to just making the minimum payment.
Know Where You Can Turn For Help
Do you know where you can go for help if you don’t think that you can make a payment on time? While you may want to consider a payday loan or some other form of short-term credit to help you out, that may only make your problem worse. You may want to consider reaching out to your lender for assistance or look into government programs that may help you lower your monthly payments. Debt settlement, debt consolidation or bankruptcy may also be options if you need relief.
Refinance Your Loans Whenever Possible
Refinancing your current loans may help you lower your interest rate, which will lower your monthly payment and allow you to put more of that payment toward your actual balance. For instance, if you are paying 10 percent interest on a home loan, it is in your best interest to refinance and pay today’s going rate of close to 4 percent.
If you have a lot of credit card debt, you may want to consolidate it by transferring current balances to a new card with 0 percent interest. Other options may include a home equity loan or a personal loan that may come with an interest rate of as low as 5 percent or less.
Only Borrow What You Can Afford to Repay
While you can’t do anything about your current debt, you can change how you approach it in the future. Instead of borrowing as much as possible, look to borrow only what you need and can afford to repay. This will make it easier to finance your lifestyle today without getting into overwhelming debt tomorrow.
Managing your debt can help you allocate money for retirement, for discretionary purchases and for any other cause you want to spend money on. Therefore, make sure that you don’t borrow more than you can afford to repay, and if you already are in over your head, find someone who can help you get out of the hole that you are in.