There are a number of debt management techniques designed to help you reduce your debts sooner than later. This includes advice such as paying more than minimum monthly payment amounts on credit card debt or, preferably, paying off credit card balances completely at the end of the month. In addition to these types of nuts-and-bolts debt management strategies, how you prioritize debt payments over other activities is also an important factor that deserves active money management attention. If you owe money to others -- whether family, friend or commercial creditor -- there are certain things that you should not be doing while the debt remains outstanding.
1. Operate Without a Budget
If you are operating without a budget you probably do not have a clear picture of your debt obligations and, as a result, have not prioritized them. A budget is a money management tool that allows you to plan and track spending by calculating your total monthly income and detailing all expenses for a set period of time. A budget will include line items such as housing, utilities, health care, transportation, student loans and credit card debt. A budget assists you in keeping a rein of your actual spending. It also gives you a clearer picture of where you might reduce spending for reallocation to debt obligations.
2. Rob Peter to Pay Paul
The old saying about paying Paul by robbing Peter is as true today as it was when it first came into common use. It means do not borrow from someone to pay someone else. If you find yourself unable to avoid this situation, you are likely in a worse debt situation than you think. It might be time to seek professional assistance, such as a financial planner or other debt management solutions.
3. Keep Up With the Joneses or Kardashians
Just because your neighbor, work colleague or sibling can purchase an expensive toy does not mean that you have to seek the same or similar one. If you are in debt, you absolutely should not follow suit and, instead, pay down some of your debt. At the root of this problem is comparing yourself with others from a materialistic perspective. If it makes you feel better, keep in mind that you do not know how others are suffering to maintain the outer appearances of wealth.
4. Insist on Brand Loyalty
If you are in debt, you might have to reconsider your brand loyalties. If the goods or services are non-essentials, you might consider limiting or eliminating them from your spending until your debt is paid. For necessities, alternative brands or non-brands can save you lots of money. Market trends indicate that consumers are, in fact, becoming more value-conscious and anticipate maintaining this more frugal approach to shopping even after personal financial situations improve.
5. Gambling
Gambling's odds generally favor you losing your money. If you are in debt, it is best to use any additional cash resources you have to pay down debt instead of investing it in a game of chance. Also, gambling euphoria might also lead to developing certain addictive behaviors that can result in your getting further in debt, according to Scott Teitelbaum, M.D., in his article "An Introduction to Compulsive Gambling."
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