Techniques of Debt Management

The main reason why so many people today find themselves in debt is due to rampant usage of credit cards! Yes, it’s true. Credit cards offer the convenience of buying the goods today and paying for them later. This convenience has been misused by our generation beyond belief.

Debt is a dreaded word! Once you fall in it, it takes a lot of planning and perseverance on your part to get yourself out. It would take some really good finance management techniques to bail yourself out of this unwanted situation.

Make a Monthly Budget and Stick to it
It’s very important that you make a budget every month, listing all your income and necessary expenses. Then, there is always some unnecessary expenditures that you can certainly do without. For instance, buying new clothes and cosmetics even when you have a cupboard full of them, taking a yearly membership of a gym when you do not even go there once a week etc. So the first advice is to eliminate all unnecessary expenditures, prepare a monthly budget, and stick to it.

Consolidate your Liabilities
With debt consolidation, you can transfer all your overdue finances from various credit cards, to one single card. This will lower the overall interest rate that you pay on the bills, and at the same time, will save you the headache of keeping track of a number of credit cards, their due dates, and due amounts.

Negotiate for Lower Interest Rates
Negotiate with the creditors, be it banks or private lenders, to lower your interest rates or the amount due. A good way to negotiate, provided you have the money, is to offer them a lump sum, which is lesser than the amount you own, all at once. Sometimes the creditors may agree to this arrangement, if they feel that they might lose out on the entire money you owe them.

Take Help from Consumer Credit Counseling Service (CCCS)
Get in touch with CCCS for debt reduction assistance. They have certain eligibility criteria which you have to meet first. After that, they will negotiate with your bank to lower the interest rate on the credit card. The CCCS will pay your credit card company and you in turn will have to pay them some predetermined amount at regular intervals.

Become a Smart Shopper
When you set out for shopping, make use of coupons wherever you can. Shopping from second hand stores, shopping for things online, and buying from discounted stores are some of the ways to reduce spending, which will keep in check any further additions to your debt.

Use Cash for Payments and Keep Only One Credit Card
Wherever possible, use cash for payments. This will ensure that you only buy things for which you have money available. Reduce your credit card usage to the minimum. One of the best tips here is to keep only one credit card and give up the rest. This way, you won’t have to keep a track of multiple due dates for bill payment, and this will keep the tendency to default on payments due to bad memory, under check.

Take a Second Job!
If you are finding paying off your bills a bit difficult due to low income, supplement it by taking up a second part-time job. Internet has opened up many avenues for earning some good, extra income from the convenience of your home.

One of the major benefits of debt management is that if your finances are sorted out, you will be able to lead a very stress-free and happy life. Finally, once you have got your finances in order, spend wisely and inculcate the habit of saving. This will keep you from falling into the vicious cycle of debt again.