Debt Management Resources
Learn how to manage debt so you can maintain control over your finances.
If you’re going to use credit cards – or even loans – then you need to learn how to manage debt. Managing debt effectively means creating strategic plans for debt repayment and being able to prioritize debts effectively. With the right debt management strategy, you can stay on-budget and avoid credit problems down the road.
These free debt management resources can teach you how to start managing your debt correctly. We explain everything from how to construct and effective credit card debt repayment strategy to how to use solutions like consolidation to pay off debt faster and save money.
Video: Smart strategies to take down credit card debt
If you’re carrying multiple credit card balances over from one month to the next, it’s time to take them down! We explain two ways to take down credit card debt using two proven debt reduction techniques.
[On-screen text] Take Down Credit Card Debt: The Right Way to Fight High Balance Credit Card Debt
Narrator: Credit card debt can be one of the toughest enemies you face as you fight to protect your financial realm. Armored heavily with high interest rates, regular minimum payments often barely make a dent in these debts.
[On-screen text] There are 2 basic strategies to reduce debt effectively. The style you choose depends on your situation.
Narrator: Luckily there are two strategies you can use to fight back effectively. Which method you choose really depends on your situation.
[On-screen text] But first… you must know your enemy
Narrator: But first, you must know your enemy to craft an effective strategy to win the war.
[On-screen text] Average credit card debt per U.S. adult = $5,596; cards that have a balance month-to-month = $7,743; average no. of card per cardholder = 3.7
Narrator: Average credit card debt in the United States is over $5,500, and is even more when you focus only on those who carry balances over every month. And while the average number of cards is less than four, that number often grows to five to ten for those fighting against debt problems.
[On-screen text Fighting style no. 1: Tiger Style. For those with the power to take big bites out of debt every month. Debts to target: Highest interest rate first
Narrator: Now fight: Tiger Style!
[On-screen text] How it works
Narrator: Here’s how you make this strategy work.
[On-screen text] Maximize your fighting power: Streamline your budget, cutting unnecessary expenses and boosting cash flow
Narrator: First streamline your budget by cutting out expenses that you don’t absolutely need and this will maximize your power.
[On-screen text] Hold off smaller enemies: Maintain the minimum payments on all of your debts except one
Narrator: Hold off on smaller enemies by making standard minimum payments, then focus all of that power to deliver powerful blows to the next debt with the highest APR.
[On-screen text] Take down biggest threat first: Make the largest payment possible on the debt with the highest interest rate
Narrator: This style uses your credit power to take out your biggest enemies in debt first so you target your debts in order of the highest interest rate.
[On-screen text] Move on to the next biggest threat: Once the first debt is done, roll your cash over to the next highest APR debt
Narrator: Once that first big boss is down, move on to the second and focus the bulk of your power to defeating it next.
[On-screen text] Start clearing the field: As you work your way down, you’ll have more cash power to eliminate debt even faster – you gain more power as you go!
Narrator: As you work your way down, taking out each opponent with the highest APR, you’ll begin to clear the field and gain power as you go.
[On-screen text] Eliminate multiple enemies at once, when possible: Once the first debt is done, roll your cash over to the next highest APR debt
Narrator: By the time you get to your smallest enemies, you should have enough power to cut down several enemies at once until all debts are eliminated!
[On-screen text] Are you a tiger? You need power to be a tiger – if you don’t have a large volume of cash available in your budget, you won’t have the power necessary to take bites out of your biggest debt threats.
Narrator: Tiger style is best used by fighters with the financial power already available. So, if you don’t have much cash on hand, you may not have the power needed to take out those big enemies quickly. In which case…
[On-screen text] Fighting Style No. 2: Crane Style. Peck away at your smallest debts first to gain the momentum you need to win. Debts to target: lowest balance first
Narrator: Crane Style may be your best method.
[On-screen text] Find any available seed money to feed your fight
Narrator: Scour your budget for any little bit of cash you can use to eliminate debt and make minimum payments to keep your biggest enemies at bay.
[On-screen text] Keep combatants on the field: Keep up with minimum payments on all of your debts
Narrator: Target debts with low balances first because they’re easy to wipe out. Here’s how this strategy really works.
[On-screen text] Start by pecking away at your smallest debt: Devote all of your extra cash to make the biggest payment possible on your lowest balance
Narrator: This method pecks away at smaller enemies first so you can gain power as you start to clear the field.
[On-screen text] Each debt eliminated boosts your energy: Every time you pay off a debt, you eliminate that bill so there’s more cash to face bigger enemies
Narrator: Next devote your focus to taking down the debt with the lowest balance. You’ll gain monetary power each time you cut down a debt because there will be one less debt to eliminate.
[On-screen text] Work your way up to the biggest baddies: Once you’ve cleared out all of the small debts, roll those savings into the cash you’re using so you can take out the biggest threats.
Narrator: By the time you get to your biggest balances, you’ll have the power you’ll need to take them down!
[On-screen text] Are you a crane? If the debts that have the highest interest rates are also the ones with the biggest balances and you don’t have a lot of cash, then it makes sense to start at the bottom and work your way up.
Narrator: Crane style is best suited for debt fighters with limited cash flow who need to gain momentum as they battle.
[On-screen text] Consolidated Credit. When debt is the problem, we are the soluti8on. Call 800-210-3481, www.consolidatedcredit.org
Narrator: And remember, if you’re having trouble winning your battle, Consolidated Credit is here with reinforcements that can help you win!
Self-Help Guide: How to read a credit card statement
Whether you go paperless or still get monthly statements in the mail, you should always review your credit card statements carefully. But the truth is, many Americans simply ignore them. If you do, you could miss rate increase notices and important information about how much your debt will cost you.
How to Read a Credit Card Statement
Understanding your monthly credit card statement can help determine whether your spending is in line with your budget. By reading and understanding the fine print (especially the fine print) of your statement, you can prevent overspending and become more educated on how your credit card program works. Use this book to learn the ins and outs of your credit card statement and better balance your budgeting and debt.
Infographic: Understanding the benefits of debt consolidation
Traditional payment methods aren’t always the fastest or least expensive way to pay off debt. Debt consolidation can help you eliminate debt faster and save big money on interest charges. And this works for more than just credit card debt! Learn about the advantages of debt consolidation so you can understand how it helps you reach zero faster.
Debt-to-income ratio calculator
If you apply for a loan, the lender will check your debt-to-income ratio to make sure you can afford the payments. If you’re over 41%, most lenders won’t approve the loan. But you can also use your DTI to measure your own financial health. Check your ratio now to see if you need to focus on debt elimination.
Bi-weekly payment calculator
Switching to a bi-weekly payment schedule can help you pay off loans faster and save money on interest charges. Instead of making monthly payments, you pay every other week. Your payments are cut in half. However, because you make 26 payments each year, you end up paying off debt faster than you would with 12 monthly payments. This calculator helps you evaluate the benefits of moving to bi-weekly payments.
Do you still have questions about how to manage your debt effectively? Ask our team of certified financial coaches to get the answers you need. | Ask a Question |
