Debt is such a dark word; it instantly strikes fear into the hearts of everyone. Whether it’s school loans, credit cards, or mortgages, no amount of debt is easy. That’s why I’m sharing with you all, 5 ways to manage your debt that I wish I would have known earlier.
Debt does not mean your life is over. You can still live your life with debt, just maybe not the way you envisioned. Take a look at your debt and just breathe because I promise you will come out of this a better, more financially responsible person.
The most important part of managing your debt is accepting the damage you have already done. Accept that you needed those school loans in order to attain a higher education. Accept that you made one too many purchases on your credit card. Whatever debt you have made, accept it and move forward with the promise to be more financially responsible.
The second most important part of managing debt is prioritizing your debt. Realistically, the debt that is incurring the largest interest should be paid off first. Take a look at all your debt and make a list with the highest interest rate at the top of the list and the lowest interest rate at the bottom. If there are 2 debts that have the same interest rate, pay off the smallest debt amount first. This may be contrary to what others tell you, but you’ll pay off that smaller amount in less time and it will give you a sense of accomplishment and the drive to continue managing.
Take a look and see where most of your debt is going. If your debt is because of school loans or a mortgage, those are unavoidable debts. This point mostly applies to credit card debt. Add up not only the large purchases, but all the small purchases that were made on your credit card. If most of your purchases go towards food, think about eating at home more often versus grabbing food on the go. If most of your purchases are concert tickets (like myself), consider skipping a few concerts and only going to your top 5 if they tour (this is extremely hard). Analyze the way you can cut back so that you don’t keep incurring more debt as you’re trying to pay it off.
5. Seek help
You are not failing if you ask for help; on the contrary, you are succeeding if you take it upon yourself to ask for help. Asking for help is admitting that you want to change your current financial situation. There are so many free resources that can help you set a financial pathway to a (virtually) debt-free life. My favourite resource is a Financial Planner at your banking institution. These people actually want to help you and they don’t make any commission or money off of the people they help. They want to see you do well, so use them.