Managing debt can be quite difficult. It’s something that millions of people worldwide struggle with daily. When I was in college I remember getting my first credit card. Back then banks would have campus reps on campus getting students to sign up for credit cards almost daily. At eighteen years old I didn’t know anything about credit cards, I wasn’t even working at the time. It was a trap and myself and many other college students fell right into the trap.
Even after that first brush with credit, it took years for me to fully understand and learn how debt management works and how to work on my credit. One of the most important lessons I plan to teach my children at a young age is how to manage debt and encourage them to make sure they take care of their credit. Helping them understand credit will hopefully help them manage debt much better than I ever did.
While I’m no financial expert, I do love sharing tips with my family, friends, and readers. Below are some of my tips for managing debt.
Create A Budget
It’s important to create a budget anytime you’re dealing with finances. Learning how much money you have coming in monthly and what’s going out, let’s you know almost immediately if you’re in over your head. If you have more money going out that you have coming in, paying off debt will be almost impossible. Creating a budget, however, will provide a clear picture of your current financial state and how you can start to prepare to manage and clear some of those debts.
You can create a budget for several aspects for your home, including one for groceries, bills, and debt management. Set clear spending guidelines so you see where all your money is being spent. Make sure to keep track of where you may be overspending and places you are also spending less than you budget because you can make changes to those areas over time to better balance your budget.
Create A Bill Payment Calendar
It’s very important when managing debt to make sure you are making all your payments on time, even if you’re just making the minimum payment (which I do not recommend). Missing payments can create huge problems for your credit profile. Bills can become overwhelming over time and sometimes we may forget to make payments. A bill payment calendar is perfect for helping you remember when bills are due and when you make those payments.
Make sure to record bills that you have on autopay from your accounts, bills that you make the payment yourself, and ones that you mail out checks to or pay with cash. Remember to document quarterly bills, bi-annual, and annual bills as well in your calendar. You don’t want to miss payments you aren’t making often but are required to be paid.
Create A Payoff Plan
People sometimes things having credit is a problem so they tend to shy away from credit, however you need credit to buy a house, car, and quite a few other things. Credit scores are used to determine interest rates, so if you don’t have credit it can hurt just as much as having bad credit. Once you’ve created your budget and you know who you owe and what you owe it’s time to create a payoff plan.
Start with any collections and charge-offs you may have on your credit report. Getting negative items removed from your credit report will help your score grow. Contact any collection agencies listed and negotiate a payoff arrangement. Make sure all correspondence between you and the collections agency is written to keep a paper trail. Next, decide which debts to pay off first. Make a payoff timeline for the first debt, once you’re close to paying it off add another debt to the payoff list until you’ve cleared all the debt you want to be paid off.
Use Your Tax Refund
Living paycheck to paycheck makes saving and paying off debt even more difficult. One this my husband and I learned when purchasing our first house was that our tax refund was the perfect way to pay off debt. While I know most people count on their tax refunds for different things, it’s perfect for paying off debt especially if you get a large refund. It’s the only time of the year most people will have access to extra cash outside of their jobs, so creating a plan to use it for debt or helping pay bills in advance is a great way to get ahead and feel like you are gaining control of your finances.
Make list of all the debt you can pay off based on your refund. Even if it doesn’t pay off all your debt it can cut it down and eliminate at least one of your monthly bills. Plus you’ll save money on interest by paying off your debt whether it’s credit cards, collections, student loans, or charge-offs.
Consider Debt Consolidation
Debt can seem crushing at times and like we don’t have any way out but to just let it go and sent to collections or apply for bankruptcy. Before completely giving up thinking you don’t have any other options consider debt consolidation. It can save you money on interest over time. Debt consolidation offers one reduced payment instead of multiple payments to creditors each month. That one payment is lower than all your other bill payments combined, saving you money each month. Hornet Partners offers debt consolidation and can answer questions you may have about consolidating your debts.
When you’re ready to get help with consolidating your bills gather all your credit card totals and visit the Hornet Partners website. They will collect basic information from you including your name, address, phone, email address, household income and estimated debt amount. Be sure to calculate all the credit cards you’re including in the consolidation. Once you enter all your information they will contact you to start the process. If you have questions before starting the process call Hornet Partners and they’ll answer your questions and help you with getting started.
Hornet Partners: Money Saving Apps
Finding ways to cut down on your spending can help you have more money to apply to your debt, and Hornet Partners has shared a few money saving apps to help you save your coins.