Debt Management: Plain and Simple
Contributed by Luey
Debt Management: Plain and Simple
Does the term debt management sound like pig Latin to you? The average American holds about $9000 in debt to credit card companies. It is time to be proactive and stop living at the mercy of these credit card companies. Here are some common sense skills in debt management, that can help you control debt.
Debt management is about knowing EXACTLY how much you owe
Most of us who owe money to credit card companies try to avoid knowing the true amount. Typically what we think we owe is much less than what we actually owe. One simple and easy way to keep track of your debt is to keep an excel spreadsheet containing a list of everyone you owe money to. Create columns for each month and enter or credit card balance next to the corresponding card. You can also keep track of how much you are paying in finance charges using this method. The figures can be pretty ugly, but then again being buried in debt isn't pretty either.
Create a payment plan for your debt
Once you have added up all your debt, you need to determine how much money to allocate to each card. A popular method is to pay the most on the highest interest card. This method will save you money in the long run because it will lower the amount of finance charges that you pay. With a smaller amount allocated to paying finance charges your plan will make pay more towards the principle balance. The key to making debt management successful is to be consistent. Maintain or increase the amounts that you are paying for each debt.
