If you’re feeling overwhelmed by mounting debt, then here are a few quick tips for getting your debt under control.
1) Create a budget
• It can’t be said enough that creating a budget is the first step towards managing your debt. You have to be able to see your income and expenses totally laid out before you in order to get a proper picture of your financial situation. You can create a budget on a sheet of paper, in spreadsheet or you can use an online tool. Here is a site that offers a FREE budget calculator: http://www.wonga.com/budget-calculator/
2) Get familiar with your debt / Journal your expenses
• Once you’ve got your budget created, look it over and get familiar with it. If you feel like you haven’t been able to budget in your non-essential spending such as clothing, snacks, coffee dates or the odd night out, then start tracking these expenses either with a journal, by keeping the receipts or by using an accounting program such as Quicken on your computer. Quicken requires you to balance your chequebook, therefore all expenses need to be entered and categorized. Once all expenses are entered, you can then use their budget tools to see exactly where your money is going.
3) Call your creditors
• If you can’t meet the minimum repayment on a credit card, then you should absolutely call the credit card company and speak to a representative. Even if they can’t help you, at least it will be on your record that you did call and let them know about your situation. Ideally, a calm phone call with a request for a temporary reduction of the minimum payment should have a positive outcome. Also, if you’ve been a good payer until recently, there is the possibility of asking the credit card company to reduce your current interest rate. The worst they can do is say no, so it’s certainly worth the phone call. Overall, don’t hide from your debt; it will only get worse if you don’t face up to it.
4) Focus on paying down one bill at a time
• If you have a credit card bill that has a higher interest rate than other bills, it’s wise to put any extra money towards paying down this debt. Always continue to meet the minimum required payments on all other bills, but when it’s possible, make overpayments towards the bill with the highest interest rate. Once you’ve done six months of overpayments, it may well be worth going back to step 3 and try calling your creditors again to inquire about reducing the interest rate. Kill them with kindness and they might be able to help! You can actually get a good feel for your progress and be able to gloat a bit at your success when you’ve paid off one bill in full. Go you!
5) Eliminate impulse buys and retail therapy
• If you really want to get yourself out of debt, then you are going to have to trim the fat out of your budget. If you’re living paycheque to paycheque then it’s likely that you’ve already done this, but sometimes it’s worth reviewing step two and seeing where your money is being spent. Being on a budget is like being on a diet, if you don’t allow yourself a treat now and again, you’ll likely fail. Much like having that biscuit, allow yourself some little indulgences within limits. You can replace a night on the town with a potluck or game night at home and everyone brings a bottle of wine or side dish. Or perhaps this is the perfect opportunity to quit smoking – you’ll save yourself heaps when you are no longer buying packs of cigarettes.
This is just the tip of the iceberg when it comes to managing debt. There are lots of creative ways to scrimp a bit here and there, and you may end up enjoying it more than you thought. Everyone loves a bargain and being a money saving expert, so stop worrying about debt and get to work!
Article Source: http://www.articlesbase.com/personal-finance-articles/five-quick-tips-for-managing-personal-debt-762496.html
About the Author:
Jamey Wheeler writes for Wonga.com who offers short term loans online.