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Debt Management Tips for a Smarter Debtor

By David Pilley on July 26, 2010

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Managing your debt takes a plan. It may seem like a monster if it’s large, but you are ultimately in charge of keeping your debt under control. There are many ways to manage it, so take a deep breath and relax.

First, you need to keep track of your money. Take note of how much money you are making, and either write it down in a budget or put it into a spreadsheet. Also write down what you are purchasing and how much it costs. Make separate categories for food, utilities, home payments, car payments, etc. You also want to keep your receipts. If you don’t know how much you’re paying and for what, you’ll never be able to get a firm grasp on managing your debt.

Next, you can plan for the future by saving. When you get each paycheck, designate a specific amount for assignment by putting it into a savings account. Consider putting between ten and thirty percent of each paycheck into savings. You decide how much works for you, but there needs to be some amount being saved. Many savings accounts also have interest, meaning that the amount stowed away will grow over time. If you’re not thinking ahead, your ensuing future could be an overwhelming storm of papers and numbers.

In regards to your bank accounts, online banking can help greatly. If you have an online account, you can manage and make payments any time of day on any day of the week. This way, you can save money on gasoline and you can save time from waiting in long lines.

You also want to lower the number of bank accounts you have. One bank account and one savings account is much easier to keep track of than, say, five different accounts. Having fewer accounts also means having fewer fees, such as for overdrafts and purchasing new checks.

If you don’t think you can manage it by yourself, consider these final options with outside help: debt consolidation, debt settlement, or credit counseling. If you have multiple credit card accounts, consider merging them into one account. You can also try to negotiate with your creditor to reduce the amount you owe. Or you can go to a credit counseling agency to establish a debt management plan. Just be aware of a few things before going one of these routes. Do not take a consolidation loan with a variable rate. (This means the interest rate is based on the prime rate. It fluctuates, and you have no control over it.) Do not pay to access a debt management program’s website. (You’re in debt. You don’t need any more fees!) And if you are considering a credit counselor, check with the Better Business Bureau to see if there are any customer complaints. The choice is yours, but you should consider these options as a last resort.

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