Following are tips that are important in managing and reducing debt:
• Make getting out of debt a priority, and develop a debt reduction plan (e.g., repaying $200 monthly until all debts are repaid).
• Involve everyone in financial decision making (including children who are old enough). Challenge the whole family to find ways to save money to free up money to repay debt.
• Do not go shopping just for something to do.
• Know what it costs to live. Keep records of your expenses. Look at ways to reduce expenses.
• Don’t carry cash. It has a tendency to disappear.
• Wait at least 24 hours to consider any large purchase.
• Learn about community resources that could reduce your expenses or supplement your income. Look for low-cost forms of entertainment.
• Look for temporary sources of additional income, if possible, to repay debt.
• Pay at least the required minimum payment on credit card bills and loans.
• Make sure you understand all of the interest and fees that you are paying, and try to lower them, if possible.
• Contact creditors before you miss a payment to try to avoid late fees.
• Try not to use credit for day-to-day expenses, and avoid the use of credit as a way to live beyond your means.
We would like your feedback on this Personal Finance Frequently Asked Question.
