How to Manage Debt and Get Ahead

We live in a consumer economy that relies on spending to stay afloat. Everywhere you turn there are more advertisements for new things to buy. It is nearly impossible to live a life free from debt nowadays. There are ways to balance debt while watching your financial health. In this article we will teach your how to manage debt and get ahead.

1- Live below your means.

The best way to manage your debt is to minimize the amount you owe. Living below your means will give you the opportunity to pay off debt balances and save money. Resist the temptations to buy the newest tech gadget or have the trendiest wardrobe. Set a clear budget and live well within your means so your debt balances do not creep up and become unmanageable.

2- Evaluate where you stand.

You cannot manage your debt or get ahead of it if you don’t know how much debt you have. It is a natural response to want to ignore your debt, but this will just make your situation worse. Sit down and list out every debt you have including its balance, interest rate and monthly payment. Also list what your monthly take home pay is and what your assets are. This will give you a clear picture of where you are at and help you to identify how to fix any financial struggles.

3- Keep a strong credit rating.

Most people use debt to purchase a car, pay for a college education or buy a home. In order to get the best loans and rates possible for these life investments you need a strong credit rating. Maintain your credit score by having a balanced debt portfolio consisting of revolving consumer debt and installment loans.

Follow these tips to have an outstanding credit reputation:

* Always make your payments on time.

* Keep an available balance of at least 50% on your revolving credit.

* Do not open up a credit card with every place that offers one.

* Do not let small bills go overlooked and cause collections on your credit report.

4- Set up savings funds.

Another great way to manage the debt you have and get ahead is to avoid accruing new debt. Life emergencies pop up at the least convenient times. If you have money set aside into sinking funds you can use it when these emergencies pop up. Some examples of sinking funds are a car maintenance or home maintenance fund. The next time you car breaks down you will have the funds available to do whatever repairs are needed. Your goal would be to put an amount each month into your sinking funds to protect you as events occur throughout the year.

5- Set clear goals.

In order to get ahead with your finances you need to have clear goals. There is no one size fits all approach to handling your money. Different life circumstances require different financial responses. Assess where you are today and where you want to be, and then make a realistic plan to achieve it. Perhaps you need to increase your income or decrease your spending, or find a balance of each.

No one likes paying the interest that is associated with debt, but it is possible to pay your debt in a timely manner while maintaining your financial stability and even enjoying life. Email Carolina Money Minders today to discuss how you can best manage your debt while reaching your financial goals.