Worrying about debt can be emotionally, mentally, and physically destructive. Debt can cause us to lose sleep, underperform at work, isolate ourselves, and keep secrets from loved ones. If you’re paying off one credit card with another, you may not even realize how much it weighs you down and consumes your subconsciousness. But there’s a way out with smart debt management.
This post simplifies debt management for dummies (and smarties alike), distilling it down to four tricks.
Debt management for dummies in four simple steps:
1.Understand the whole picture of your debt
The first step in debt management is knowing exactly how much you owe. Make a list of who or what establishments you owe money to, how much, how much monthly payments are, interest rates, and due dates. Don’t leave any debts off this list—now is not the time to hide payments and debts because they can accumulate interest and throw you off balance (literally).
If you have a dozen smaller debts scattered accounts several accounts, creditors, and lenders—all with different minimum payment due dates and accumulating interest—consider consolidating your debt. This may simplify your debt payments but do your research first.
The key here is to get organized by writing a list that helps you see the whole debt picture clearly—as long as you refer to and update the list often with your progress.
2. Prepare a budget and plan—and stick to it
Now that you have a list of your debts, take a look at your monthly payments, interest rates, due dates, monthly bills, and income. Use this information to make a plan. Look at how much you owe every month for essentials like rent, utility bills, groceries, and so on. Set aside that money, plus buffer funds for unexcepted payments or bills. Everything else should go to paying off your debt.
Here are some quick tips for planning your debt management strategy:
- Set calendar reminders to pay off every minimum monthly payment
- Pay off at least the minimum monthly payment
- Missed payments are bad for your credit score and add up interest
- Decide which accounts and debts you plan to tackle first with your remaining income
3. Cut back on spending and increase income
When it comes to debt management for dummies, this one may come as a no-brainer, but it’s essential to digging your way out of debt. Cut back on spending and consider ways to increase your income. Look at your monthly spending and find ways to cut back as we mentioned previously.
If there’s nothing you can cut out, then consider ways to increase your income. Perhaps you can pick up a few odd jobs, part-time work, or ask for that raise you’ve been promised at work. If you’ve borrowed money to pay bills, use credit to pay off debts, and avoid the phone because it may be a creditor, you’re likely already stretched too thin, financially. Acknowledge the signs that you have too much debt and seek help.
4. Seek help when you need it
Debt management doesn’t need to cause you to lose sleep, underperform at work, keep secrets from loved ones, and be destructive to your health and happiness. There are healthy, low-impact, and sustainable debt solutions and professionals like us who can help.
Progressa’s debt solutions work with your lifestyle, income, and budget so that getting out of debt is as intuitive, easy, and stress-free as possible. We recommend sitting down with a financial advisor who helps uncover the depths of your debt and makes healthy debt management plans. We help build your credit and find ways to set aside savings for the future.
Progressa has helped tens of thousands of Canadians pay off outstanding collections, consolidate debts, build credit, and get back to financial (and emotional) health.
The author Sam Milbrath
Sam Milbrath is a freelance copywriter and brand marketer. When she isn’t writing for brands or doing her own creative writing, she’s exploring, taking photographs, gardening and doing pottery. Check out her work at www.sammilbrath.com