Five Keys To Overcoming Bad Debt Management

B

ad debt management is at        source of their problems.
an all time high. More          Although it is easy to obtain
people are having more          easy credit, that does not
financial problems than ever          determine how people choose to
before. Bankruptcy is at an all       spend their money. Financial
time high. Financial stress is        responsibility and accountability
tearing families apart.               is the path to a debt free life.

Many people think debt                Bankruptcy causes more stress,
consolidation is the answer to        wipes out your credit and haunts
all their financial problems.         you for years to come. With
Just think… you get one loan to       determination, education and
pay off all your debts. Then, you     application of correct money
only have to deal with one            principles, you can regain
company and one payment. You have     control of your financial life
to admit, it sounds very good.        and quickly get on the road to a
                                      debt free life.
However, getting a debt
consolidation loan will not           Five Debt Management Keys to
likely resolve existing financial     Success
problems until or unless one
learns how to manage their debts.     Managing ones debt is critical.
Financial abuse can get out of        Debt management teaches you how
control. It can become additive       to handle your personal finances.
just like drugs or alcohol.           Here are five important
Often, financial mismanagement        principles to use in learning how
occurs because of lack of             to best manage your finances.
understanding.
                                      1. Meet with a Reputable Debt
Some blame easy credit as the         Management Counselor

                                      You should talk with several
Sometimes we can’t see the forest     different counselors. Learn as
for the trees. This idea is           much as you can. Find someone
particularly true with respect to     that really listens. If possible,
our personal finances. Getting an     talk with someone that has worked
outside, objective view of your       with the counselor. Get
current financial status is very      information on what the counselor
important.                            has done to help other people.
                                      Don’t be afraid to ask specific
A good debt management counselor      questions: What will the
will review your current              counselor will do? What will you
financial circumstances and help      be expected to do? How much it
you develop a plan to pay off         will cost? How long will it take?
your debts. You can expect honest
and frank feedback. Anything less
would not help you.                   Once you’ve found a good debt
                                      management counselor with a
Your relationship with a debt         proven track record, commit
counselor is important. If you        yourself to listening to and
feel at ease in talking, you’re       applying the advice you receive.
more likely to openly discuss
your needs and personal problems.     2. Make Debt Reduction as a
However, keep in mind that you        Priority
probably won’t like everything
you hear. Nevertheless, when you      Every debt is different. You have
know he/she has your best             different amounts to pay. The
interest at heart, you’re more        interest rates vary. It may not
likely to follow the advice you       make any difference on how you
get.                                  decide to tackle your debt. The
                                      most important point is that you

focus on paying off your debt.        Success comes by consistently
                                      paying your debts. If you pay
Once you’ve gotten some good          your debts first, then you know
advice from a debt management         exactly how much money you have
counselor, together you can           to live on.
determine the best way to pay off
your debts. You should feel good      Be sure to record and document
about your financial plan. Each       each transaction. It doesn’t
time you pay off a debt, you will     matter what method you use to
feel better. Each time you pay a      keep track of your payments. You
debt, you are one step closer to      can write them in a checkbook
financial freedom.                    ledger, put money in envelopes
                                      for each budget category or enter
Make paying off your debts the        each transaction into a computer
biggest priority and you will         program. The real key is to know
soon be on the road to a debt         exactly how much you spend in
free life.                            each of your allocated budget
                                      categories. When you’ve spent all
3. Follow Your Budget Plan            the money for a given category,
                                      you’re done for the month.
One major key to success in debt
management is establishing and        4. Tear Up All Your Credit Cards
following a budget. Your budget
should allow you enough money to      One of the biggest reasons people
pay your debts and still have         accumulate so much debt is the
your necessary living expenses.       use of credit cards. It’s easy to
The closer you follow your            charge something. You don’t have
budget, the more likely you will      to pay cash. It’s like the old
succeed in becoming debt free.        saying “Out of sight, Out of
                                      mind”. If you don’t see the money

going out, you’re not as aware of     unnecessary expenditures. You’ll
you spending.                         begin to develop new and improved
                                      spending habits. Ask yourself.
Your debt management counselor        What is my most expensive bill?
has many more resources than you      Is it heating? Is it air
do. They can make financial           conditioning? Is it water?
arrangements with your creditors
to lower your payments and            Next, become aware of what you do
interest rate. In most cases, you     each day. Do you leave the lights
will have to agree not to             on when you leave a room? What do
accumulate any more debt.             you do when you leave the house
                                      for several hours? You may think
Tearing up your credit cards          that turning down the heat or
takes away the temptation to          turning up the air doesn’t save
increase your debt. It’s easy to      much. That is true. Nevertheless,
say something doesn’t cost that       if you do it everyday, those
much, so a little charge here and     little savings begin to add up.
there won’t hurt. Don’t deceive       Just think of it as your personal
yourself. That’s how people get       savings plan. The less you pay,
into financial problems in the        the more you have to spend in
first place… Get rid of the           other places.
credit cards. Pay cash or pay
nothing.                              Small expenditure reductions over
                                      time add up to big savings.
5. Become More Conscious of Your      Become more conscious of where
Expenditures                          your money is going.

When you become acutely aware of      Learning and applying good debt
where your money goes, you can        management skills will make all
begin to reduce or eliminate          the difference in your life. Once

you have paid off your debts,         experience again. Say goodbye to
you’ll be in total control again.     bad debt management forever.
You’ll never want to repeat the

About the Author:

Larry Andrew founded and operated his own educational consulting corporation for over twenty years. He has extensive experience in teaching, business and finance. He is the publisher of http://www.bad-debt-management.com.