Steps To Managing Your Debt

Managing Your Debt

Steps To Managing Your Debt

23rd May 2007

When you are in over your head with debt it is like being stuck in a maze. The debts seem never ending and no matter how much you pay, your bad debt situation seems to just get worse. The first thing you need to is grab a pen, a book and open the book and list all your creditors one by one on a clean page. Next to the name of each creditor write down the total amount you owe and then add them all up to get one total. This helps give you a realistic picture of how much debt you are in.

Managing Your Debt I did this and I realized at the time I was in total consumer debt of $12,082.78 and this is after paying off some debt and reducing balances dramatically on others. This was just consumer debt, my mortgage was not included and I had to sell my two year old Mercedes Benz C-Class and rent out my home. As you can see, when faced with bad debt and a difficult financial situation, the smart thing to do is to cut down your expenses. It may entail having to re-adjust your lifestyle and giving up some of your possessions but it beats bankruptcy or falling ill from stress resulting from bad debt.

To begin managing your debt here are a few tips.

Pay your debts on time
Paying late is not the end of the world. When you know payment will be late call your creditors and tell them your situation.
If you simply cannot or meet payment, call your creditors and arrange to pay even a percentage of the amount. Most creditors have deferment plans for financial hardships.
Always keep records of your phone conversations with your creditors. Take the name of the person you speak to and write the conversation down. Take note of the date and time of the conversation too.
Once you pay off some of your debts, this is not an okay to acquire new ones.
Keep a budget and stick to it
Stop spending

Being in a bad debt situation is a very bad experience and it is difficult to live through financial hardship but it is not the end of the world. It should however be a financial lesson and should teach you not acquire bad debts and to make informed and wiser decisions regarding your personal finance.

"When a fellow says it ain't the money but the principle of the thing, it's the money." - Kin Hubbard

Comments (7):

Marie Says: The last point is very important but you cannot stop spending 100% | 05.23.2007 |

Ian Says: I think what he is saying is stop spending on things that aren't of importance right now, if you don't get it now it won't make a difference to your life | 05.23.2007 |

Andy Says: Wow, had to sell his car and rent his house. At least you took those steps, it takes maturity and will because most people would be too afraid | 05.23.2007 |

Pete Says: People would be afraid of taking the necessary steps because of the 'keeping up with the Joneses type of mentality. You have to do what you gotta do | 05.23.2007 |

Lara Says: I admire your courage in sharing with us the drastic measures you took to rectify your financial situation. I think this can be a lesson to many | 05.23.2007 |

Kenneth Says: If you are determined to reach your financial goals I don't think one setback should be the factor that stops you from getting to where you need to go. Wow, you must be a very disciplined person Kev and I admire you for that | 05.23.2007 |

Rob Says: Good one Kev. | 05.23.2007 |

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