7 Practical Ways to Manage Your Debt

Debt is something that most people will have to cope with at one point in their lives.

In fact, on average each household with a credit card is burdened with over $8,000 in debt. If you add consumer debt on top of that, like mortgages, auto loans, and student loans, the national total is a staggering $13.8 trillion dollars. 

Unfortunately, financing is necessary for many citizens in order to pay for their homes, cars, education, and healthcare. Taking out a loan is not necessarily a bad thing, the trick is learning how to manage it. You need to have a more proactive attitude towards your debt, and seek professional advice. Here are seven practical ways to help you manage your debt, and your spending.

Make a realistic budget

This is the best way to avoid debt. It is a lot easier said than done, however. It’s very easy to forget to account for extra costs, and often people struggle to make a realistic budget. It’s a good idea to consult with a financial advisor or money-saving expert. They will be able to help you prepare a budget that works for your situation.

Stick to your budget

Sticking to your budget is often the difficult part. It’s a slippery slope, but it’s tempting to go over once in a while and think it’ll work itself out. Don’t worry, nowadays technology can provide a solution, there are several budgeting apps that can help you manage all your finances on a single device or smartphone. 

Pay by cash

Some people go by the rule, if you don’t have the cash to pay for it, don’t buy it. If you do use a credit card, if you can’t afford the monthly payments then you’re spending too much. Controlling your credit card spending is often the first step to managing your debt. You could also consider paying electronically with your smartphone and set this up to directly debit your account. It’s really just as convenient as paying by card. 

Personal loans

If you need to clear debt then it might be time to get out a personal loan. This is easy to do nowadays, as long as you do your research. With companies such as https://lendvia.com/, you can apply for a personal loan online. Paying off your credit cards is a great decision to make, and with a personal loan, you can aim to do this.

If you’re deciding between a personal loan or credit card, weigh up the costs of interest rates you’re going to need to pay, depending on your situation. Personal loans don’t normally allow you to borrow more money than the original amount. They’re good if you’re paying off a specific debt or want to buy something on a one-off basis.

Speak to your bank

If you have a mortgage or other forms of financing, speak to your lender if you have any doubts or difficulties. Perhaps there will be a different solution more suited to your situation. Don’t just panic and think you can’t afford it. Arrange a more manageable option for you and budget towards it. You can also shop around and do a bit of research. Find out if you’re in the best situtation for managing your debt. 

Ask for professional advice

The first thing to remember is never to be ashamed to ask for help. There are different ways you can go about seeking professional advice. If you have a particular problem with your mortgage payments, for example, you could speak to an advisor. You could also speak to a nonprofit credit counseling agency, where trained credit counselors promote financially responsible behavior and deliver a free and informative service. 

Debt management programs

Typically, in this case, a nonprofit credit counseling agency will prepare a debt management program for you to pay off your debt by reducing the interest rates and making your repayments more affordable. It’s also possible to settle a debt in some cases with a lump-sum payment. Usually, the creditor will reduce the debt by 25-30% in order to receive the money upfront. 

You can always improve your financial situation, no matter how it looks. Seek professional advice and figure out which option is best for you. It some cases it’s possible to find a long-term solution that allows you to manage your debt, in a more stress-free manner. The worst thing you can do is try to ignore your debt. By acknowledging it, you’re already taking an important first step.