If the bills are piling up, and you are starting to feel out of your depth with your finances, you need to start getting to grips with your debt management. When you have only a couple of payments to make each month, it is not difficult to keep track of where your money is going. When you have many debts however and all the creditors are screaming for their money immediately and you do not have any, then that is a different matter. That is when debt management must become a priority in your home.
First of all, who do you owe money too? Make a list of every one of your creditors. Whether you owe them $ 60 or $ 60,000 they need to go on the list. Next to each creditor you need to write down how much you owe, how much your monthly monthly payment is, what the percentage of interest is, and how many months the repayment schedule is (if this is known). You should also make a note of which debts, if any, you now have arrears on and how many months behind you are with the payment.
Now you need to make a list of all the other monthly expenditure that you have. Debt management is not just about the debts; it is also about knowing how much money comes into your home, and where it goes. Your expenditure list should include all essential items such as utilities and groceries, and also allow a small amount for unexpected costs such as birthday cards, school items, etc. Total this up and add this amount to the minimum payments column on your debt list. What is left is your monthly discretionary money.
What you now need to do is to use the discretionary money to start and pay off your debts faster than by simply paying the minimum monthly payment. Look at the interest rates you are being charged. How many of your debts are not decreasing because the interest rates are so high that the minimum payment just about covers the interest? Often you will find that this kind of situation arises with maxed out store cards and these are the debts you need to wipe out first by using some of your discretion money to make payments above the minimum required.
Debt management is not about making a tight budget, although it may mean you are living on less than you would like. What debt management is about is regaining control of your finances, and once you have done that, you will find that you are much more confident that your money is going where it is needed the most.
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