How to Manage Consumer Debt

The ability to manage debt properly doesn't come easy for some consumers. As a result, many consumers accumulate a heavy debt load, which creates a major financial burden. Whether you have a little or a lot of debt, there are techniques to help you manage debt. Proper management can lead to a better credit score, and you're likely to pay off your debt sooner.

Instructions

1

Determine how much you can afford to spend on debt. Get rid of debt faster by using your disposable income to eliminate balances. Write down your monthly expenses and subtract this number from your income. Allocate any extra money to debt payments.

2

Fina an extra source of income to augment your take-home pay. Lack of extra income impedes debt elimination efforts. Create a plan to bring in more money. Turn your hobby or talent into a side business or seek a more lucrative job.

3

Be sure to pay at least the minimum payment due on your debts. Even if you don't have a lot of extra money, aim to pay your minimum each month to avoid a negative credit rating.

4

Pay more than your minimum, if possible. Pay down debt faster by doubling or paying a lump sum on your debt each month. Paying $500 a month can reduce a $6,000 debt in approximately 12 months, depending on the interest rate.

5

Destroy credit cards. Avoid accumulating additional debt by cutting your credit cards in half or removing them from your purse or wallet. Carry cash and limit credit card use.

6

Seek professional help. Obtain a lower interest rate on credit cards and pay off your debt within a set time frame by contacting a debt management company. Research companies and select a non-profit organization. These particular companies often do not charge a monthly fee, or they may offer a sliding payment scale for the fees.

7

Research consolidation options. Home equity loans, refinances and debt consolidation loans typically offer lower rates and fixed terms. You may be able to consolidate your debt and pay it off sooner. Contact a loan officer to discuss your debt consolidation options.