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Need help with your budget? Debt is one of the most stressful things that people can experience. It’s scary to see your balance grow without you doing anything, and it can feel like there’s no way out. This article will teach you how to take control of your debt once and for all so that you don’t have to worry about it anymore!Find out how you can take control of your debt once and for all by following these simple steps! Click To Tweet
What is Debt?
First things first: what’s debt? Essentially it means owing someone else money. Most people think only credit card usage counts as being in debt, but there are many other types, including student loans or financing cars.
There is good debt (such as mortgages) and bad debt (like using a credit card for a new TV). It would be best to learn how to tell the difference between debt types.
Set Up An Emergency Fund
This will help you if something unexpected comes up and you need money fast. This fund must be accessible, so don’t put it into a savings account that has a high minimum balance or takes too long to withdraw from.
You should have enough saved up to cover at least three months of living expenses if you can save more than that, even better!
Start By Tracking Your Spending
The next step is to start tracking your spending. You need to know where all your money is going if you want to make changes. There are many different ways to do this – some people prefer pen and paper while others use budgeting apps.
No matter which method you choose, make sure to track everything: groceries, bills, entertainment, etc. This will give you a good idea of where your money is going and where you can cut back.
Create A Budget
After tracking your spending for a while, you’ll be able to create a budget that works for you. Your budget should include all of your regular expenses as well as debt payments. It’s important to be realistic with your budget – if you know you can’t stick to something, then it’s not worth including!
Making changes can be difficult at first, but it’s so worth it in the long run. Follow these tips, and soon you’ll have debt under control!
Consolidate Your Debt
Sometimes debt can seem overwhelming. There are a lot of different bills and creditors to deal with, but it doesn’t have to be that way!
Debt consolidation is the process of combining all debt into one new loan at lower rates – this saves you money on interest charges. You’ll likely get more time before payments start when debt consolidating since they will pay off your original debt first. Click here to learn more.
This has several benefits:
- You only need to make one payment per month instead of many
- Your minimum monthly payment may go down(which means more wiggle room in your budget)
- Interest charges could go down (saving you even more!)
Debt Consolidation Vs. Debt Management
Debt consolidation isn’t for everyone. Some people prefer to stick with debt management instead. With debt consolidation, you can lose access to your debt and could potentially owe more than before (although this isn’t usually the case).
With debt management, on the other hand, an agency negotiates a lower interest rate for you and helps create a budget that works for both monthly expenses and debt payments. They’ll contact all of your creditors to get them consolidated onto one bill as well – it’s like having an extra pair of hands when dealing with debt!
Make sure to do some research into what each option has to offer so that you know which is right for you!
How much does it cost?
Debt consolidation isn’t free: expect fees around $100 -$200 per year through debt management.
The cost should depend on the type of debt consolidation and which agency is helping you with it (if any). The main thing to remember is that this isn’t a decision you want to take lightly. Make sure to do some research into what each option has to offer so that you know which one is right for your budget!
How much does debt consolidation help?
There’s no easy answer here: how helpful debt consolidation ends up being depends on several factors, including interest rates and balances owed. Generally speaking, though, there are usually lower interest rates and fewer fees than debt management.
Debt consolidation can also help simplify your debt payments- making it easier to stay organized and on top of everything.
No debt problem is the same, so it’s important to remember that debt consolidation won’t work for everyone.
You should also talk with a debt counselor if you’re considering debt consolidation: they can help answer questions and offer more information about what debt management or debt consolidation might look like in your situation.
Remember, whether it’s debt management or debt consolidation – getting out of debt starts with tracking spending and creating a budget!
Can you share any other tips to manage debt effectively?
Krystle Cook – the creator of Home Jobs by MOM – put her psychology degree on a shelf and dived into a pile of diapers and dishes instead. She is a wife and mother to two rambunctious boys, sweating it out in her Texas hometown. She loves cooking, DIY home projects, and family fun activities.