If you are struggling with debt, it might seem impossible for you to manage.
But there are several ways to get out of the debt-pit, no matter how bad the situation is.
Let us discuss the simplest ways to manage your debt problems.
- Maintain a monthly income statement: A monthly income statement can be an excellent mode of tracking your monthly and yearly expenditure.
Generally income statements consist of the following categories: gross monthly income, rent, car payment, groceries, gas/transportation, bills (which include phone, common utilities, credit card payments and student loans), groceries, entertainment, and miscellaneous items.
You will need to jot down all your daily expenses and sum them up at the end of the month.
This will help you track your income and expenditure.
A personal income statement will help you compare how much you spend every month.
You can also determine the area of concern and cut down your expenses in those specific fields.
- Keep away your credit cards: Don't use your credit cards to make everyday household purchase, like food and grocery, etc.
Keep in mind that your credit cards are meant for emergency use only.
Credit card affects your debt in the worst possible way as you tend to overuse your card without keeping a track of the total amount.
- Do not make minimum payment, it's a trap: If you are making only the minimum payment each month increases the amount of time it will take to pay off your debt.
It also increases the amount of interest you end up paying.
To pay your debts off quicker and cheaper, you should pay as much as you can on your balance each month.
This practice will also help you keep a track of your credit card usage.
- Beware of fraud debt management companies: If you are in a bad debt and need help, make sure that you go to a proper debt management company (it is always better to get a reference from people who have been through this).
There has been a steep rise in the number of fake entities posing as debt management firms.
They can easily rip you of your money and worsen your debt problem.
So it is important to ensure that you are in safe hands once you have decided to get into a DMP (Debt Management Plan).
- Spend less save more: Last but not the least on your list should be a pledge to curb your spending habits.
Have a realistic idea of how much you can afford and spend accordingly.
Try and increase your income by taking up little initiatives like renting out your garage space for the day when you are out at work.
Try to sell your old mobile and make some cash out of it.
With this extra cash each month, you can give yourself a treat or even make a saving.
So start your journey towards a debt-free living.