Tips for Managing Debt

People often ask for tips on managing debt. We could write volumes on how to properly manage debt, but there is really one principal behind all of it – spend less than you make. It may sound simple, but in practice it can be difficult. But with a few simple steps, you can take the mystery out of this principal, and get yourself on strong financial footing. There are three basic tips that we immediately offer to anyone interested managing debt. They are: (1) know your budget, (2) make a plan, and (3) pay less.
The first step is to know your budget. Many people do not have a good understanding of how much they spend in a month. So, it is really important to create a written budget which lists out how much you spend. You can start today, just writing down every penny that you spend. Make sure to add those things which you only buy every couple of months, or maybe once a year –things like holiday gifts, property taxes, new tires for your car, etc. After a couple of months you will have a good understanding of your monthly budget. This is essential to make sure that you don’t spend more that you make.
Our second tip is to shop around. One of our attorneys used to describe a situation in which his father used to embarrass him at McDonalds by asking for a discount every time he went to the counter. Sometimes they would say no, but many times the clerk would pull out a coupon, or enter a discretionary code which would get his dad 10% off of cost of the meal. We have found that you can do this almost anywhere. So always try to get the best deal you can. Shop around between stores for the best prices. Clip coupons whenever you can. Ask for discounts from the store clerk – even if you have no reason to think they will give you one. You may be surprised at what happens. Imagine if you could save an average of just 10% on everything you buy, just think about how much better off you would be financially.
Finally, pay your debt down faster. The credit card companies make money by keeping you in debt. The faster you can pay it off, the better off you will be. Try to pay more than the minimum payment on at least one of your credit cards every month. In no time you will have that card paid off, and you will be free of its burden – then move on to the next card and do the same thing. With a plan and a little bit of discipline you can learn to effectively manage your debt. Good luck.
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