3 Key Rules for Debt Management
Debt management is on everyone’s lips as we recover from the economic downturn and begin looking forward to a brighter future. You may be ready now to try to shed some debt that accumulated during the lean time and look forward to a debt free life. The big question is how do you apply debt management principles to everyday life?
This rule has been around ever since we grew out of the bartering system. In the old days, overspending wasn’t even an option. If you didn’t have the nickel needed to buy your loaf of bread, you went without. Today, you can easily buy things that you can’t really afford.
The first thing that you must do is to learn to not overspend. This encompasses all the rules about budgeting and allotting your money to various areas. If you have $60 a week set aside for groceries, do not spend over $60 for groceries. If you are getting to the end of the week and only have potatoes left, make potato soup. Whatever you do, do not go over your allotted budget.
Save For What You Need
If your vehicle breaks down and you can’t afford to fix it, you will be tempted to use your card or take out a loan. However, if you have been saving in small increments all along, you just might have the $300 you need squirreled away in an envelope somewhere to pay that repair bill. If it seems difficult to squeeze any extra money out of your budget, start out small. Anyone can find $5 in their budget. Put aside this $5 for upcoming repair bills or other emergencies.
Pay off Debt
Paying off debt is obviously an important step in debt management. But what is the best way to do that? Start with your lowest debt, such as a credit card with $1000 on it. Pay that off, and then move on to your next lowest debt. Disregard interest rates. If you get a bonus, or a raise, or income taxes back, put it towards your debt to pay it off faster.
By following these simple rules, you will learn about debt management and how to avoid debt in the future. You will also learn how to manage the money you have so that when you need it, it’s there for you.