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Debt management in 2011: Gaining control and finding debt help

Created: On December 27, 2010 @ 4:00 pm In

When reviewing your budget and making a plan for [1] managing debt, it’s important to focus on moving forward. Criticizing yourself and your family for spending too much isn’t going to improve your debt situation. Instead, make a team effort toward paying off debt and moving toward a cash-based household budget.

Knowledge is power: Identifying and documenting debt

This can be the most unappealing aspect of debt management, but documenting your debt is important for establishing where you are today, and where you want to be. Here are some important aspects of recording and tracking credit card debt:

  • Who you owe: List your creditors by name and mailing address
  • What you owe and what it costs: Enter the most recent balances for your credit cards and their annual percentage rates (APR) The APR is clearly posted on each statement.
  • Minimum monthly payments: Ideally, you make more than minimum payments, but documenting the minimum payments helps with preparing a household budget.

Be thorough (and honest) when documenting debt. The next step is prioritizing [2] credit card debt repayment and determining if you’ll need debt help.

Credit card debt: Prioritizing debt payments

These steps are helpful for determining which debts to pay off first, and for ensuring that you have enough funds to repay creditors without incurring more debt or shorting other household expenses.

  • Highest APR first: Generally, it’s best to pay off your highest APR credit card debt first. Start your debt repayment plan by paying as much as you can toward your highest APR debt while paying minimum payments on your remaining accounts. When your first debt is repaid, apply the funds you were paying on it toward the next highest APR debt. Repeat these steps until your debts are paid.
  • Beware of special offers and promotional periods: Many of us have used low to no interest introductory offers for transferring credit card balances or buying big ticket items offering no interest if paid off within a specific period. If you’re approaching deadlines for paying off special promotion balances, pay these balances first. Failing to meet such┬ádeadlines can result in deferred finance charges being added to your balances.
  • Don’t close credit card accounts: If you’re able to avoid using credit cards, put them away and use only cash or a debit card. Closing accounts can lower your credit scores by reducing your overall available credit.

[3] Consumer credit counseling and debt consolidation services can assist with arranging affordable repayment plans with creditors and developing a household budget.. These programs can be a good alternative to filing bankruptcy or falling for “credit repair” scams.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2010/12/27/debt-management-in-2011-gaining-control-and-finding-debt-help/

URLs in this post:
[1] managing debt: http://www.debthelp.com/kc/debt-consolidation-and-debt-management-three-options.html
[2] credit card debt repayment: http://www.nfcc.org/CreditCounseling/faq.cfm#c
[3] Consumer credit counseling and debt consolidation: http://www.debthelp.com/debt-consolidation/credit-counseling.html