Feb 3 2012
5 Tips For Handling Debt
If you think you’d like 2012 to be the year you take charge of your life, the very first thing you should consider is to set a goal in the New Year to get out of debt for good, and stay out. Maybe that means consolidating credit card debt into one payment, paying off the arrears one at a time, or selling things you are sure you don’t need. In any case, below are some suggestions to help you begin:
1.) Power Starts With Information. First, understand exactly what you owe on your present obligations. Jot them down in order of balance due. This doesn’t have to be anything fancy, you can simply make a spreadsheet with columns of the debt name, amount owed, IR that you are paying, and minimum amount outstanding each month to keep it current.
2.) Write Down Time To Payoff. It you continue paying off your dues at the rate you're now, how long will it be until they're paid off? It can serve as inducement to be completely clear about how long this may take, and it’s usually surprising to many folks how quick the debt can pile up, and how long that it requires to repay.
3.) Start Paying It Down . Pick one debt and start paying as much extra on the minimum as you are able to afford every month. Some of the people will start by paying off the credit card or debt with the highest rate of interest, but some financial consultants advocate that we start by paying down the debt with the smallest balance, then rolling that payment into the next balance once it’s paid off. Decide what’s suitable for you.
4.) Decide whether you can actually afford your mortgage?” If you've had a change in your situation, eg a decrease in revenue or a sickness that is making it difficult to keep up with your home loan payments, call your mortgage company.
Some mortgage corporations offer what’s called a mortgage modification plan. This modification essentially means you can qualify to have the terms of your original loan reworked – resulting in a lowered rate and decreased monthly payments.
You may also choose to revise your housing arrangement by downsizing into something more within your means. It doesn’t need to last forever, just until you can get back to a good financial situation.
5.) Focus on your bills. Do you pay your cell phone bill without having a look at it? Sounds simple enough, but some people pile bills unopened and just settle up without ever going over the bill itself.
It is not exceptional to find that you have been overcharged, in many cases repeatedly. Would you not like to keep your money in your pocket rather than send it to your cell phone company (sure you would).
6.) Put something in savings every payday. Even though it’s only $20.
It’s important to pay yourself first, in whatever amount you are able to afford. Making saving a habit is critical, and you'll be amazed by how the account will grow over time.
Summary
It’s possible to get your debt under control just by paying atttention to what's going on and working toward paying it off a little at a time. Do not let yourself see the situation as hopeless. There’s help available if you feel lost, confused or exasperated.
Mike Warren writes about subjects related to goal setting and personal development, and maintains a website dedicated to the topic at Achieving Personal Goals. When not writing about personal development, he enjoys his own fitness pursuits, aviation and playing golf.
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