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Are you working on keeping track of your debts?
Dealing with debt can be very stressful — not only because it’s tougher to make ends meet while carrying debt, but also because it requires a lot of time and effort to keep up with what you owe. This is especially true given the average American has four credit cards.
While having multiple credit cards and loans in play can help you maximize your rewards and build your credit score, it can also complicate your bill-paying process. Trying to keep track of multiple debts at a time is no easy feat, especially in today’s busy world.
Here are five tips for tracking and managing your debts, meant to help you stay on top of what you owe and make the repayment process as pain-free as possible.
When you’re juggling multiple obligations every month, it’s easy to get disorganized. This is why many people find it helpful to sit down ahead of each month and create a bill calendar. This calendar will keep track of how much you owe, when and to whom. Many borrowers find it helpful to see their obligations written out clearly in a format that reminds them to make timely payments.
Some people prefer to set up auto pay, which is a wonderfully convenient feature but only works if you avoid your checking account becoming over-drafted. Sometimes it helps to play a more active role in monitoring your bills rather than opting to “set it and forget it.”
On every bill you’ll see a minimum amount due. This is the absolute least you can pay without accruing late fees and allowing your account to slide toward delinquency. So, it’s very important to make at least these payments, on time, every month. Anything extra you can afford to pay beyond the minimum will help you eliminate the debt faster and for less interest.
Some people have success consolidating their debts, either by using a balance transfer card or taking out a loan to pay off multiple lines of credit at once. The thought process here is that reducing how much you owe in interest makes it easier to tackle debt. The stronger your credit rating, the more favorable loan rates you’ll be able to get. Debt consolidation for bad credit exists too — it just might take some shopping around to find advantageous rates.
Throwing your funds willy-nilly at your debts is a missed opportunity. Prioritizing debts — that is, paying them down systematically one at a time — can help you either save money or reduce the time it takes to become debt-free.
Two popular methods are the snowball and the avalanche. The former is all about paying off your debts from smallest balance to largest, with the advantage being the quick wins you amass right off the bat. The latter prioritizes debts from highest interest to lowest interest. Of course, paying the minimum amount due on all accounts is crucial whether you decide to try snowballing or avalanching.
There’s no shame in wanting or needing some help managing your debts. Credit counseling agencies exist for this exact reason. These professionals can offer you personalized budgeting and debt advice and can even enroll you in a debt management program if you decide to go that route. Appointments are generally free; just be sure to choose an accredited and reputable counselor with which to work.
Keeping track of your debts and deciding how to best manage them is half the battle. With a game plan, you can make strides toward becoming debt free.
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