Managing Your Debt Intelligently

When debt collectors start pursuing you, it can be entirely overwhelming. When you are in debt, it means more than simply owing cash. Balancing keeping up with bills and paying off your debt is what being in debt is about. More than anything else, it is essential that you manage your money so you don’t get into more trouble.

Know where your finances stand

It is important that you get a recent copy of your credit report. Credit reports give you all of the information available on your debt. Three companies report on credit. Each agency is legally required to provide you with one report each year when you request it. Make a list of what you owe after comparing all three reports. To make an informed decision about where you go next, it is important to know where you stand.

Plan what your next steps are

Knowing what you owe is the first step of deciding how you will handle your situation. When you know what your bills are currently, you will be able to figure out what extra you have to pay off debt. Paying off the highest interest rate debt first is the most important. Paying off the debt with the highest interest rate first saves you money.

Negotiate with those that you owe money to

Once you know what money you can spend, call the creditors listed on your report. Most creditors are willing to negotiate with you. When you call the debt collectors, have all the information about that debt in front of you. Talk with them about a plan that fits into your budget. Return phone calls and paperwork as soon as you can. Be open and honest about your situation - it will help you negotiate a deal that works for everyone.

Pay the bills you have

When you have a negotiated deal, it is important to pay your bills on time. It is also important, though, that you keep up with your everyday bills as well. Let the collection company know immediately if you find yourself in another tight spot. It’s easier to keep your financial life on track when you keep the company informed. Paying your current bills on time and paying off your debt both improve your credit score. While you are in debt, it’s important to work on getting back on track. More than just paying off debt, getting back on track is important. Managing your debt and your current finances carefully, are also a part of getting back on track. You can more easily determine your next steps by knowing where you stand. Paying off your bills is easier to do when you know what you are able to pay and can negotiate. You will also! be establishing good financial habits when you work through this process.