Debt is a master who is hard to please


With a sound debt management plan, you can work your way out of serving the spiral of debt and take back control of your finances.

Follow these top ten debt management tips:

1 - Track Spending

You're probably already aware of what you spend on big-ticket items like your mortgage and car payment. But do you know where your pennies are going? Take a month and write down everything you spend money on. Knowing to the penny where your money is going is the first step on your path to debt management.

2 - Cut Expenses

Examine your spending list and cut expenses. Do you really need high-speed internet and that mocha? Of course not. Debt management is your priority now. Quit eating out, clip coupons and makes changes around your house to reduce your utility bills. Pennies may seem like chump change right now, but add them up and they count for a lot.

3 - Transfer Credit Card Balances to a Low-Interest Rate Credit Card

Do your research before transferring that balance. Some credit card companies throw red-herrings in their contracts that might lead you to think you're getting a great deal. Watch for low-introductory rates and find out when subsequent rates are implemented. Take a look at annual fees and other surcharges. If you qualify, try getting a fixed-rate card.

4 - Negotiate

Most companies are willing to negotiate a payment plan with you. Contact your creditors and ask for a reduced rate or an extension on your current payment plan. Don't use a debt management company to do this. A debt management company will likely charge you fees and it will place a flag on your credit report.

5 - Beware of Quick Fixes

It might seem like a good idea to take out a tax-deductible home equity loan or borrow from your 401(k) to reduce the credit card debt you have now. But watch out, most people who take these quick fixes run up their credit card debt again because they haven't resolved the root of their debt problem. Then they've placed their homes and their future at risk.

6 - Snip the Credit Cards

Use paper, not plastic when shopping. By using cash to pay for your day to day purchases, you'll be more aware of the money you're spending. Once your cash is out, it's out. Make do until your next paycheck.

7 - Focus, Work and Sacrifice

Make debt management your highest priority. A short-term focus on ridding yourself of debt will turn into long-term ease of mind.

You may not be able to rid yourself of all debt on your current salary. You might need to get a temporary job or find other short-term ways to raise quick cash. Make sacrifices in your time and delay instant gratification for awhile.

8 - Go Green

Green living is more than just saving the environment, it's the color of money and the color of envy when your friends and family realize you are living debt-free. Use mass transportation. You may even be able to get rid of that car, the car payment, insurance, fuel and maintenance costs. Turn down that thermostat and air conditioning unit, turn off the lights and other appliances and raise your own garden to save cash.

9 - Pay Off Debt

There are two schools of thought on this principle. One advises you to pay off the smallest debt first and then transfer the extra money into your next highest debt. Another advises you to pay of the debt with the highest interest rate first.

By paying off your smallest debt first, you'll see immediate differences which may give you the incentive to continue your debt management program. If you're disciplined and don't need to see immediate results to stay motivated, pay off the debt with the highest interest rate first.

10 - Save Your Money

Don't get into debt again. Save your money for that next big purchase instead of financing it. Keep a six month supply of cash in your savings account for unforseen problems.

Debt management takes hard work and discipline but being debt-free is worth it.

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This article was sent to us by: George Zenitti at 06302010

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