Five Simple and Effective Ladder of Steps for Debt Management

| January 13, 2014

Debt (Photo credit: LendingMemo)

The best way to handle debt is to manage it. You cannot run away from it and expect to live a peaceful life. There are several tips that can help as you try to manage debts in order to have freedom. In the next section, you will discover several things that you can do so to cope the debts that you have and enjoy financial freedom like you would wish to.

Five Steps to Manage Your Debt

Step 1: Consider rearranging your debts. This means, check the debts you have and plan for best ways to pay them off. The moment you think through this, you would avoid problems such as missed payments or missed deadlines which attract late charges. You can also avoid piling up of other debts.

Step 2: As part of management of debts, you also need to check on your credit rating. A low rating can be very costly and without management you may end up with poor ratings. Consider some of the effects of a low credit rating such as high interest rates and low borrowing power. This may ignite you to want to work on your debts soon.

Step 3: There is free debt advice that you can count on. This should be from reputable credit counseling organization. You must check on their level of experience and recommendation from other users before selecting them. You would be surprised at how much at ease they would put you so you can easily deal with your debts. It is also wise to develop a budget plan and stick to it. These will help you not incur additional debts that can make life unbearable for you.

Step 4: As you work on managing the debts you have incurred, you need to work on a debt free formula. For instance, you may want to bend towards using only prepaid cards. Credit cards are among the top causes of credit problems. Consider staying with prepaid or debit cards only. This will also help instill discipline in spending within your means.

Step 5: You must also review your credit card needs to get over debt. Many people have soaring credit card debt simply because they have so many cards that they do not even need. Review your needs and if possible cut off any cards that you’re not using. Limit yourself to one card only and maybe the family could also use the same when necessary.

However, when worse gets to worst; you may need to opt for settlement so as to manage the situation. There are two main options. The first option is consolidation. This is where you merge all your debts into one so that it is manageable and have lower interest rates. It is hectic to deal with several creditors. Those people who have been in the same situation can attest. Consolidation works in a way that you get to pay off everyone else and remain with just one lender to deal. But at the same time, you spread debt over a longer period of time. If the first option fails, then you can try option two which is bankruptcy. However, as much as possible it is wise to try and manage debt with other options first.

Claire Reed is a finance writer for 12 Month Loans website.  Claire Reedif is always online. If you have any questions, please, let him know!


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Category: Debt

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