How to Manage Debt Step by Step
Developing the right strategy to manage debt is essential if you want to avoid debt problems that will stress you and your budget. You need to have the right plan for paying off credit cards and loans, so you can keep debt minimized and save money. This guide will walk you through how to manage debt correctly, so you can work towards achieving financial stability.
5 steps you can’t afford to miss
There are five basic steps you should always follow to manage debt in order to avoid credit problems and financial distress.
- Always pay your bills on time, because missed payments are extremely bad for your credit and lead to penalties.
- When possible, refinance or negotiate lower interest rates to minimize interest charges and make it easier to reach zero.
- Never allow credit card debt minimum payments to exceed more than 10% of your take-home income.
- Talk to your creditors ahead of time if payment challenges arise to make special arrangements, such as forbearance.
- As long as you won’t incur prepayment penalties, make larger or extra payments to eliminate debt faster.