It’s always best to avoid debt if possible. However, if you do owe money, here are some tips that can help you manage that debt successfully.
Three tips to managing debt
- Plan the cost of your debts into your monthly budget. If you have some extra cash at the end of the month, put it toward paying that debt off.
- Pay more than the minimum on debts with interest rates higher than 3%. Paying the minimum only covers the interest of your debt, not the actual amount of the loan. In the end, you’ll be paying back a lot more than you borrowed.
- Prioritize your debts. Make smaller payments on all your debts except the one with the highest interest rate. Once you’ve eliminated that debt, move on to the next highest interest rate debt.
Do you have too much debt?
- Here are some warning signs from the United States Department of Labor that signal you may need to seek help to handle your debt:
- Borrowing more money to pay off other loans
- Creditors are calling for payments
- Consistently paying only the minimum on credit cards
- Maxing-out credit cards
- Borrowing more money to pay regular bills
- Being turned down for credit
Debt can be incredibly stressful to deal with alone. If you don’t feel like you can talk to your family or friends about it, try contacting an organization that deals with debt reduction like the National Foundation for Credit Counseling.