5 Tips for Handling Debt
If you’re looking for the coming year to be a better one for you financially, make the decision to let the New Year be the time you choose to get out of debt for good and stay out.
Below are some tips to help you get started:
- Knowledge is power. Don’t avoid knowing where you stand with your debts. Write them down in order of balance owed. You can use a simple spreadsheet with columns of the debt name, amount owed, interest rate that you’re paying, and minimum amount due each month to keep it current.
- Write down how long it’ll take you to pay off them off if you keep paying exactly what you’re paying now. Pay as much extra on the minimum as you can afford each month. Most people usually start by paying off the one with the highest interest rate, but some financial advisors recommend that you start by paying off the one with the smallest balance. Decide what’s right for you.
- Ask yourself, “Can I really afford my mortgage?” If you’ve had a reduction in income or an illness that’s caused you to struggle with your mortgage payments, call your mortgage company. Many offer what’s called a mortgage modification plan. This modification simply means you may qualify to have the terms of your original loan reworked-resulting in a lowered interest rate and lowered monthly payments.You may also need to restructure your living quarters by downsizing into something more within your means. It doesn’t have to last forever – just until you can get back to a healthy financial bottom line.
- Pay attention to your bills. Sounds simple enough, but some people pile bills unopened and just pay the bill without ever going over the bill itself. Do you pay your cell phone bill without looking at it? Many people have figured out that they were overcharged not once, but multiple times. Wouldn’t you rather that go in your pocket than the cell phone company’s bank account?
- Put something in savings every payday. Even if it’s only $20.
You can get your debt under control just by staying alert to what’s going on and working toward paying it off little by little. Don’t let yourself see the situation as hopeless. There’s help available if you feel lost, confused or frustrated.