Here are a list of tips to help you in your debt control.
There are many that may try to push the limit on their credit cards.
I'll assume these are of the crowd who do not know the consequences of such actions.
I'm sure it won't be long before they find out!!
Sooner or later we all need to exercise some debt control.
Many use their credit cards to pay for every day items. At times using your card this way is good such as in a rewards program that gets you credits for airline flight, but only if you are paying in full at the end of the month or better yet before the end of that billing cycle.
Yet many are not doing this as they are using their credit to "live" on. This creates a dangerous situation of being dependent on their credit.
Though there may be dire circumstances that qualify as an emergency, such as job loss,.. making you use your card in this manner, if the control or your credit card use is not maintained, you can cause a greater emergency after the initial "emergency" is alleviated.
If you are in an emergency situation please see budgeting income plan. This is a page of
alternatives and suggestions in this situation. Many times an emergency such as lack of income can lead you to faulty reasoning such as using that card excessively in this circumstance.
If you don't want to walk down the road of lack of debt control (which is usually a spiraling hurl down a dark hole) then you need some reminders to keep you on the straight and narrow!!
Debt Control Tips
One is to put that credit card away.
I know you hear this over and over again.
But how will you practice debt control if you keep using and using it??
Next you need to record purchases
All expenses, for some pre determined time.
Live on cash during this time. I can assure you it will be an eye opening experience.
Many who use credit in every day situations put the reality of what they are doing out of mind.
Log in every purchase.
This makes the truth about how you are spending come out and your debt control efforts will go much further.
Every person I know that has put this to use has improved their money handling immensely!!!
Try six months of debt recording
If you can't bring yourself to write a daily log then do the opposite and take the last 6 months of credit card expenditures and write those down. If you have been doing the out of site out of mind kind of spending you will see where any problems exist.
We all make impulse purchases so either of these efforts to record your spending will help discourage that kind of activity.
A real eye opener to help you with debt control is the newer truth in lending statement the card act requires lenders to disclose.
It's somewhere on that statement.
It's the one that tells you how long and how much you will actually pay if you only pay the minimum required payment. Are you really willing to pay that much extra ???
Many times we trap ourselves with our thinking! We only look at what must be paid per month. Looking at the overall debt and how much that debt truly costs in the end is the smarter way
to approach your debt and the control of it.
If you are trying to work on control of your debt and lower your load, many will try and use a balance transfer to do so. This can lead to some significant reduction.
But you must continue to practice
debt control and not add any additional charges to the balance.
Further more you need a plan with many of these as after the introductory period the rates could be down right unattractive. So careful scrutiny is needed with these.
Check your credit report
This is an important task in the pursuit of debt control. If the other parts of this website haven't encouraged you to take a look, then controlling your debt should.
If your credit report has inaccurate information and is negative, your credit score is not going show the true picture of how you handle money.
This is the primary reason for not getting the most attractive rates on credit cards, loans,ect.
If you must use credit cards, an article at MSN Money gave excellent advise to use one for purchases that you can pay off in full at the end of each month (the rate can be any as you will not have a balance)
and another at a low interest rate for large purchases.
The emergency fund
Of course if you really want to have maximum control of debt, you will have a special savings account set aside for those large purchases so the stacking of debt can be kept minimal. I know that takes some REAL debt control but it can be a goal to work up to!!!!
That brings me to the big debt control tip that many have a problem with, and that is that emergency fund.
Though there are many practicing debt control that have that fund in place, is it truly funded enough?
When I did my own intense logging in of purchases, the big problem for me were those car emergencies.
The transmission dies (hate that!!), these things can make a not so bad debt problem much worse. If it keeps happening and you don't start planning you are soon in trouble!
Not having a clear budget in place can put your control of debt in some fair amount of risk. Many don't like the idea of a budget but don't you have a list when you go shopping??
If you don't have a shopping list doesn't the food bill end up costing you more?
ANOTHER trip to the market for the items you missed and MORE of
And if you do have a list and have the discipline to stay only to that list those impulse purchases can be kept to a minimum.
Well the same can happen to the bill paying of life. It can cost you much more than that unorganized shopping trip! A budget will not only put order to your bill payment but help make
sure that late payments do not occur.
Not only will a late payment have a negative affect on your debt control but your credit score won't be helped either.
This in turn will have ANOTHER negative impact on your debt control as your interest rates will be made higher due to the lower score.
When you are putting a budget in place, you may find too many impulse shopping trip (if that is a problem), you may think they all need to be cut out, but reasonableness needs to preside.
We all need little incentives, rewards whatever or however you want to label them.
A consolidation loan
Many suggest a debt consolidation loan or plan when trying to practice debt control. If your debt is out of control and your credit card accounts have percentage rates that are going through the roof, this may be a good idea.
Yet these two considerations, the consolidation loan or the consolidation plan are not the same entity.
A consolidation loan is the use of your own credit, and using that to take all your debt consolidating it in to one account.
Though sometimes you may be helped by a professional to make this choice, most times it is your choice alone.
This choice is useful for the busy life style as you only have one payment to worry about.
One caution here, once the debt is consolidated you may now have extra cash during the month.
Use it to whittle down any other debt not consolidated or fund that emergency account.
Debt Consolidation Plan
Time to exercise some real debt control. The accounts you freed up now have zero balances. Cut those cards up or put them away. Usually the goal of getting your debt consolidated is to eventually eliminate it. This won't happen if those accounts that now have a zero balance are a temptation.
If you have to close the accounts (this is not good for your credit score) but is needed if there is a serious debt problem.
Heavy debt makes all areas of life difficult!!!
The other choice is debt consolidation plan. This does not use your credit. It is more like a management plan.
It is called consolidation as you only pay one payment a month.
This is always done through a company that arranges the plan for you and makes all the individual payments.
Usually they can negotiate lower interest rates and any fees that have been charged can be waived. This can cut the time that debt is carried. It can be very effective for those that can not seem to manage enough discipline to carry out a comprehensive plan of their own.
Professionals can usually have better leverage with lowering rates than the average person.
When practicing debt control and using the debt consolidation plan you will generally retain or improve your credit score. If they are a reputable company and your payments are taken care of properly there will be no missed payments to clutter up your accounts. Many times the accounts they take care of will be re-aged meaning they will erase negative marks on your account and take it but to a time before they appeared!
That can give your credit a boost!
From experience I can tell you that practicing debt control especially in the area of eliminating a debt load will greatly reduce stress levels. Reduced stress levels equal much peace and a more healthy life.
Hats off to you if you are in control of your debt!!
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