Most people have some form of debt, whether it’s medical bills, car loans, mortgages or student loans. And if you start accruing multiple types of debt, it becomes overwhelming for you and your bank account. Luckily, there are several ways to manage debt in a way that is manageable and understandable for any adult.
Determine your starting point
Before you can tackle any debt or financial adjustments, you need to know where to begin. First, create a comprehensive list including the debt’s creditor, the amount, the monthly payment and its due date. You can rely on the list as a guide to tackling individual loans and getting a sense of the ‘bigger picture’ of your spending.
Establish a routine
Once you have a starting point, you need to develop a routine to manage your payments each month; it will help you stay on top of payments and pay any bills on time. If you prefer to create reminders on your phone, rely on a calendar or even use a bill payment calendar, you need to find a system that establishes a routine of when you get paid and what time of the month you need to pay which bills.
Prioritize your loans
You need to pay the minimum on your loans each month. However, what do you do when you have an influx of income? Try to prioritize what bills you want to reduce first and then move any additional funds into that loan. For prioritizing, consider aspects like the amount and the interest rate. You don’t want to continuously pay on a high-interest loan if it’s not necessary.
Create a budget
Once you are in a routine with your payments, start a monthly budget where you can plan all your expenses, including your debt. It will give you a realistic idea of how you should spend your money and when to take action if you don’t have enough money for a specific payment.
Reach out for help
If you find that you cannot handle your debt alone, seek help. You can work with a professional to address your finances, or you can file for bankruptcy to seek financial relief. It’s an excellent option if you are concerned about creditor harassment or debt collection.