How To Manage Debt Responsibly

Tips to Manage Debt Responsibly

It is very surprising how many people do not know what their total debt expenses are each month.

The first thing to do is to account for all your expenses when making your budget.

When setting up your budget, you must account for the following,  mortgage/rent, food, utilities, transportation, clothing, entertainment, gifts, credit card payments, auto loans, personal lines of credit, and other debt obligations.

Next, you must pay your bills on time. This will ensure that you protect your credit history and also avoid paying costly fees and late charges.

If you are in the habit of using your debit cards, you must track all your debit transactions so that you do not overdraw on your account and thus incur fees.


Another strategy used to manage debt is by reducing your credit card interest rates. By shopping around, you can find a card with a lower interest rate or a 0% promotional rate for balance transfers. Also, you can get a lower interest loan to pay off your high-interest debt, by lowering your monthly payments, you free up some extra cash flow for yourself.

If you have racked up a large amount of debt, you must determine what percentage of your income you can allocate to pay off your debt and refrain from charging more.




Finally, you must have a system in place to protect your credit information. Identity theft is on the rise and you must be very vigilant with protecting your personal information. With so many data breaches every year, it's important that you have some form of identity theft protection. Another effective strategy is to have a credit freeze on all three major credit bureaus. This ensures that in the event someone tries to use your information to apply for credit, they will be declined.

There you have it, debt is a powerful tool and as such must be used and managed responsibly. Wealthy individuals understand the power of debt and how to leverage good debt to create wealth and so should you.