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How to Manage and Eliminate Debt

By Edited Nov 13, 2013 1 1

Debt is a lot like a huge beast, if you keep it around and do not know how to take control of it, it will destroy you. So many people keep huge amounts of debt in their lives and then choose to ignore it. The problem with ignoring debt is it doesn't make it go away; it just makes it grow and become an even bigger problem. If you want to get a hold of your finances and become wealthy, you have to know how to manage your debt. There are thing you need to do to being managing your debt.

Face it

If you are going to manage your debt, you have to face it. Gather all of your bills; his includes mortgage, student loans, auto loans and credit cards. It does not matter if the experts consider the debt good or bad, it is still debt. Now add how much you owe on all of your debts up and take a good look at that number. That is the beast that you have been ignoring. Now you could just keep ignoring the debt that is eating up your future wealth, or you could face it head on.

Control it

You have faced your debt, there is no turning your back on it now, you must to learn how to control it. Your weapons are your income, a budget and a plan. You must have all three to keep the monster from growing any more. If you start the battle without one of these, you will fail. So here is how to use each weapon to manage your debt.

Start with your income. Find ways to increase the amount of money you are earning. Write online, get a second job, get more hours at work, or start a small business. Your income will be your way of keeping extra money around so that you do not have to pay for things with a credit card. If you have enough money to cover more than your basic expenses, you will never need to feed the beast again.

Next you are going to want to start a basic budget. Write all of your expenses down on paper, to include your debt. When you total your expenses up you want to make sure that they are lower than your income. If not you are going to need to find ways to cut back so that you always have extra money. Without a budget, no matter how much you make, you will overspend. In order to manage your debt you must know how much of your money is going out in order to control it.

Finally, in order to manage your debt you need to have a battle plan. If you start trying to manage your debt without some kind of a plan you will never win. Look at how much debt you have and decide how quickly you want to eliminate your debt, and then figure out the best way to do that.

Eliminate it

You have faced your debt and got it under control, but now it is time to eliminate it. Getting your debt out of your life now will make things easier on you in the long run. Debt is easy to manage if you do not have any. So start working on paying off your debt fast.

Find extra money in your budget every month to put toward one of your debts. Work on that debt exclusively until it is gone and then start on the next. You can start paying off your debt with the highest interest rate or you can pay off the smallest debt first. It all depends on what you need to motivate you. If you need to see results fast, then you are going to want to pay your smallest debt off first. However, in the long run you will save money by paying off your highest interest rate debt first. Whichever way, just do it. Pay off your debt as quickly as you can. The sooner you get rid of your beast, the sooner you will be able to live debt free.
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Comments

Feb 2, 2010 7:45am
CWilliams
Great tips for eliminating debt. It is such a great feeling to not worry about money anymore. Anyone can use these tips to improve their financial situation.
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