Important Debt Management Tips

Modern debt management is more than just paying your debts. Personal debt management is walking the fine line that ensures you have credit available the next time you need it. The best tip to manage debt is to begin debt management before you become a borrower.

Know before you owe.

These simple, yet effective steps will save you a lot of money and help you keep your financial life in order:

Track your money. Know how much you have and how much income you can reasonably expect in the near future. Know what your monthly expenses are and what you have left to pay creditors.


Save before you borrow. The best time to charge is when you really could pay cash. Although that’s not always possible, it is possible to build a money reserve that can cover several months’ expenses if you run into financial problems.


Investigate before you borrow. Look at borrowing as “buying money”. Comparison shop to find the best money bargain available whether you’re shopping for money through a bank, a finance company, or applying for a new credit card.


Beware of the large print! Nothing down, no-interest or low interest may look attractive but such offers frequently are filled with fees and penalties that can turn ugly if you get in a pinch. Always read the fine print!


Have a personal debt management plan in place to pay back before you borrow. The easiest way to lose control of your money is to let your lender make the decisions about your monthly payments. This is especially true for credit card debt.


Keep records of credit card purchases, what you bought, the date of your purchase, and a plan to pay for the item(s).


Although you are required to make a monthly minimum payment, set a goal for paying major credit card debts (i.e. appliances) within a specific time frame like three to six months.


Pay up small credit card purchases monthly. Sale items are no longer bargains when interest accrues to the sale price.


Tack on interest charges and credit card fees in addition to your principal payment. For example: You’ve budgeted $100.00 a month in payment for a new TV. The interest and fees on your credit card statement total $24.19. Your total payment = $124.19. That way you won’t be paying interest on accrued interest.


Prioritize your debts. A mortgage or car payment is more important than a credit card payment. Similarly, paying down a credit card with a 20% interest rate is more important than paying down a credit card with a 5% interest rate.


Know your rights as a debtor. If you live in the US, the Federal Trade Commission (FTC) is an excellent resource both to help you manage your debts and provide you with valuable information should your debt spin out of control.


Debt management advice isn’t written in stone. Modify personal debt management tips and advice to work with your budget and your situation.