Recent statistics reveal that U.S. households carry an average of $110,095 in debt. These debts are an integral part of life as they help us to finance businesses, own homes, pursue dream of higher education and buy cars. Managing debt may, however, prove challenging and overwhelming. With the right strategy and priorities, you can stabilize your financial situation and reclaim your life. Below are top tips for managing your debt.
Keep Track of Your Debts
Knowing who and how much you owe is one of the most effective methods in debt management. Start by making a detailed list of all your debts including the creditors, monthly payments remaining, due dates, interest rates and minimum payments. Ensure you capture all activities and remember to update it periodically. This way, it will be easier to rank the most pressing matter, and figure out what to pay off first. According to an article in The Balance, paying credit card debts first is recommended as they have the highest interest rates, costing you more in the long run. With a good tracking system, you will find it easier to monitor your debts, know what to repay, and feel encouraged by your progress in chipping away the due amount.
Improve Your Credit Rating
An excellent credit rating can be a major boost to your financial situation. If your rating is in shape, you will automatically qualify for the best rates available. To have a strong credit score, all you have to do is adjust your debt repayment approach and start paying bills on time, set up payment reminders, eliminate any small balances you have on various credit cards, ask your creditors to increase your limit, maintain an active credit account, and steer clear from making numerous hard credit inquiries. With a healthy rating, you will benefit from faster approvals and cut the costs of borrowing.
Pick the Right Investment Company
The financial lender you pick plays a significant role when it comes to matters of debt. It’s essential that you go into this with a clear idea of what you need before making a personal loan application. Once you have that in mind, compare the features, terms, and rates with other lenders. A Forbes article notes that it’s always important to know the background of the lender you are dealing with. An experienced and well-reputed lender assures you of a reliable service. With recent technological advancements, you don’t have to go to the counter to borrow money. Working with an online lender comes with even better deals.
Negotiate Interest Rates
When you feel that the credit interests are draining your hard earned cash, you can always negotiate. First review your account to check how long you’ve been their customer, your history, your current interest rate, and the rates other credit card companies are offering. After putting your facts together, you can calmly call the number on the back of your card and give them reasons why they should give you better interest rates. By following through, you will finally get a good deal. This way, you will clear debts faster, remove the financial strains and pump that extra money to more important projects.
No matter how intimidating the amount you owe seems, a proper plan can grant you the much coveted financial freedom. All you have to do is make informed choices, set priorities, borrow wisely, don’t default, adopt better spending habits and stick to your budget. By following this guide, you will surely get your financial life in order.
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