Managing Debt Intelligently

It can get overwhelming when debt collectors start calling. Just owing money is not the only part of being in debt. When you have debt, it means juggling both current bills and creditor’s bills. Managing your finances so you don’t get into more trouble is the most important part.

Know where you stand

Get a recent copy of your credit report if you have not done so. Your credit report will give you a complete copy of the information available about your debt. There are three credit reporting agencies. Each year, you are legally entitled to one free copy of your credit report. Compare all three reports and write down a list of your debts. Knowing where you stand will help you make informed decisions about where you stand.

Deciding on your next steps

Knowing what you owe is the first step of deciding how you will handle your situation. You need to know what your current bills are and what extra money you have available to pay off your debt. Paying off the highest interest rate debt first is smart - so figure out which debt is charging you the most. It saves you money when you pay off the debt with the highest interest rate first.

Discuss options with your creditors

When you know what money you have available to pay off debt, call the creditors on your report. Many creditors are more than willing to negotiate your debt. Have all the information about your debt in front of you when you call the debt collectors. Tell them what you are able to pay, and work on a plan that works for everyone. Be sure that you return paperwork and phone calls as quickly as you can. When you’re open and honest about your situation, you will be able to negotiate a better deal.

Continue paying your bills

It is very important to pay the bills that you have negotiated. It is also important, though, that you keep up with your everyday bills. Call and inform the collection company immediately if you find yourself in a tight financial situation. Your financial plan is easier to keep on track when you keep the company informed. Paying off your debt and paying your current bills on time both improve your credit report. While you are in debt, it’s important to work on getting back on track. Getting back on track means more than just paying off your debt. Getting back on track also means managing both your debt and your current finances intelligently. Knowing where you stand, you can more easily determine your next steps. When you know what you can pay, you are able to negotiate with your debtors to pay off your bills. Working through this proce! ss will also help you develop good habits.