If you’re facing a mountain of bills that you’re having trouble keeping up with, you might benefit from some debt management help. However, before you rush out and pay a credit counselor for help, consider some of these financial tips you can do for yourself first.
Seeking debt management help is a responsible move and it’s the first step in regaining control of your financial situation again. But you should still make the effort to learn as much as you can about controlling your debts and learning how to manage your finances a little better so that you won’t get back into the same bad situation again in future.
Here are our top 5 debt management help tips to get you back on your feet:
1. Reduce Expenses
When most people read tips that tell them to reduce expenses, they immediately think of switching off a light bulb or learning to cook cheaper meals. Of course it’s always a good idea to look for ways in which you can reduce the amount of money you spent.
In this case, reducing expenses means to find a way to reduce the amount of interest you’re paying on your outstanding debts. Most people are paying far more in interest charges than they should be. By consolidating your high interest debts over to a lower interest loan, you can reduce the amount you pay in interest. You could even reduce your monthly repayments, which can help your cash flow each month.
If you don’t qualify for a low interest rate credit card balance transfer, you might consider consolidating your outstanding debts into a tax-deductible home equity loan.
2. Put Your Interest Savings to Good Use
If you’ve managed to reduce the amount of interest you pay each month and lower your monthly repayments, be diligent about putting your interest savings back towards reducing your debt levels.
Even paying a few extra dollars above the minimum payment amount will help your situation enormously in the long run. You’ll be reducing your balances and staying on top of your payment obligations more easily.
3. No More Credit
If you’re already having trouble managing the debts you have, it’s important you stop paying for new items on credit. Stop using your credit cards at once. Don’t apply for new credit.
Find ways to pay cash for the things you need out of your income each pay period. For bigger purchases, use the interest-free option of putting them on lay-away and pay them off over a period of time.
4. Change Payment Times
If all your repayments are due monthly, but you get paid bi-monthly or even weekly, see if you can alter your repayment times to help pay off debts more easily. A big part of the reason why many people fall behind on their payments is that they attempt to find enough cash to make a full monthly payment at the end of the month.
Even though these people might receive regular income each week, or each second week, their money is spent on other bills during those weeks. By the time the monthly repayment falls due, the income amount isn’t usually enough to cover the full payment.
A good way to avoid this problem is to change your repayment frequency to match when you receive your income. For example, if you’re paid every second Friday, try to make a smaller repayment on your credit card bill every time you get paid. By the end of the month, make sure the smaller payments you’re making add up to at least the minimum payment due.
This can be a great way to keep on top of your debt management efforts and make it far easier for you to budget.
5. Seek Professional Debt Management Help
If all else fails and you really can’t find a way to make some of the easier debt management help tips work for you, it may be time to seek out professional credit counseling. Non-profit organizations like Freedom Debt Management seem to be really trying to help people get out of debt legitimately So always try to look for a non-profit counseling firm, as they get most of their funding from creditors, not from charging you outrageous fees. Before you agree to any services at all, make sure you find out in advance precisely what services you’ll receive.
Ideally, you should receive counseling, debt negotiation services, a debt repayment plan and some solid budgeting advice, and you should receive agreements for these services in writing before you go ahead with trying to clear debt that you have accrued once and for all. You should also take the time to check that the counseling organization is a member of any professional bureaus, such as the Better Business Bureau.
Once you’ve entered an agreement, you won’t have to worry about paying multiple bills each month. Instead, you write one check to the organization and they’ll distribute your money to your creditors on your behalf.
When your payment arrangement is in place, your credit counselor should then call your creditors. They’ll try to negotiate with them to reduce your interest rates, lower any penalty fees and waive any late fees in an effort to help reduce the amount of debt you have to repay.
Debt management help is readily available, but always make the effort to work on some simple things you can do for your own financial situation first. In some cases, you might want to consider consolidating your outstanding debts into a tax-deductible home equity loan. Learning to manage your own finances responsibly can sometimes be frustrating, but it will mean you’re less likely to get into the same bad situation again in future.