Tips For Taking Control Of Your Debt

Having some debt is normal, and necessary for making many essential purchases, such as a buying a house or a car. However, it’s very easy for debt to get out of control if you depend on it, especially if you do not have a plan for making the best use of your credit, and having a plan for minimizing interest costs and paying off your balances in a timely matter.

Is There Such A Thing As “Good Debt”?

It’s not practical for everyone to pay off their debt before they begin saving. Having some debt is an essential part of asset management, and can make sense in some situations.

For example, if you have a very small or nonexistent emergency fund, you will only go into more debt if you need to have your car repaired, or some other unexpected expense comes up.

You may still be financing the car you’re driving, or you may still have an outstanding balance on your student loans. You will be able to lower your interest if you pay these off early, but the savings on interest may not be significant enough for you to do that.

But if you’re using your credit card for everyday expenses, and your credit card balance is growing and growing just from the buildup of grocery bills, gas for your car, and going out to eat, it’s a sign that your expenses are higher than your income – and you need to make adjustments to your spending, or your balance may be out of control.

How To Take Control Of Your Debt

You may want to lower your debt because you’re getting hit with high interest charges every month. This can make it even more difficult for you to make a dent in your balance.

You can do a balance transfer to a card with an introductory 0% interest rate. However, you need to do this with a plan to not use the new credit card for everyday expenses. It can easily become just another way to rack up debt.

Work on paying off your credit card with the highest interest rate, sending multiple payments each month. The minimum payment probably isn’t enough to make much progress.

Sometimes, it makes sense to consolidate all of your credit cards to one monthly payment. You can talk to a non-profit credit counselor to help you weigh out your options – you don’t have to go at it alone!