7 Steps to Managing Debt

By Rashun Jones, MHR

During the holiday season many of us have a tendency to spend more than we usually do.

Therefore, some of us will not be interested in reading an article about managing debt. But for those who want to make it through the holidays, get a grip on their debt and start the new year with less financial stress. Here's something for you to think about.

Millions of Americans are struggling with debt. If you are one of them, and are frustrated by your past efforts to conquer your credit card and other debt, it may be the time to take a fresh look at your situation and create a strategy that will work. Here are 7 Steps to digging out of debt.

1. Assess Your Debt Plan to spend a week or two getting a handle on where you are, how you got there, and where you want ot go. Know your credit limit. Look at:

How much you owe and the interest rate you are paying.
How much income you have to work with right now.
Where you are spending your money. Use a notebook or ask your bank or credit union if they have resources to organize your debt and track your spending.

2. Develop a Budget Once you know where your money is going, develop a budget and adjust your spending to stick to it.

3. Control Your Credit The best thing you can do is pay down credit card debt. don't get any deeper in debt. If you use a credit card, use the one with the most favorable terms and cut up the rest. Make sure you check the fine print for formation about punitive pricing, universal default and two cycle billing. Avoid accounts that have any of these features.

4 Adjust Your Spending Make a conscious effort to know the difference between needs and wants. Come up with a written plan for reducing your debt systematically. Develop a daily, weekly, or monthly budget. Record ingoing and outgoing income in a notebook for easy viewing.

5. Communicate with Your Family It is imperative that all members of a family understand the financial situation so they can support change.

6. Research Your Resources and Use Them Examine ways to increase income and decrease expenses. Consider selling non-essential assets or finding additional work. Transfer balances on credit cards with high interest rates to cards with lower interest rates. But watch out for expensive balance transfer fees, and choose a card with a low fixed rate whenever possible.

7. Get Help You may feel overwhelmed if you have money troubles, but millions of people have been down this road. Don't be afraid to ask for help.
Reliable consumer credit counseling agencies, Va benefits, United Way, Career counseling, your bank or credit union all may be of assistance.

Learn from your mistakes. Once you have reached a comfortable and manageable level of debt, be sure to establish an emergency savings account to protect you from future setbacks.

Most importantly, remember to be both patient and persistent. If you get discouraged or find it hard to meet your basic financial obligations, go back and make adjustments to your plan. Paying off debt is rarely an easy process but you will find the financial and emotional benefits to be worth it once you are debt free.