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Credit Education > Debt Management Help > Debt Management for Dummies

Debt Management for Dummies

By Janet Lacey
Published: Friday, November 27th, 2009

If you feel that making regular payments on the amounts that you owe is getting out of hand and that you are unable to control your debt effectively, then join the club of millions of Americans who are today in a bad debt situation. The first thing that you need to do when you find that your expenses are over exceeding your income is to get a debt management program in place. 

Debt management plans are offered by a number of credit repair and credit help agencies. But before approaching any professional debt relief organization, you should try and manage you debts yourself. In case you don’t know how to go about it, you can consult free online literature or approach a credit counseling agency that provides no obligation, free credit counseling. 

Remember that your debt management plan should be aimed at achieving the following objectives: 

  • Equating total monthly income to monthly expenditure
  • Lowering total monthly payments on different kinds of bills
  • Getting rid of late fees and collection calls
  • Improving your credit score and credit report
  • Avoiding bankruptcy
  • Getting rid of bad debt (delinquencies, non payments, collections, late pays etc.)

You may find people advising you to go for debt management plans that include debt consolidation, debt settlement, management or even bankruptcy. However, before you start looking at any of these debt management plans, you need to incorporate a few basics in your life that should save you from any drastic measures. The things that you should start on an ASAP basis to manage your debt are:

Start Paying Your Bills: Late fees and increasing interest rates on late payments, rather than the principal amount are the culprits that land a person in the red. To avoid these two, keep making the minimum payments on all your bills and credit cards. Try paying a little more on high interest loans and cards so that you get rid of these debts at the earliest.

Do Not Borrow More: Getting a new line of credit to pay for your other ones simply amounts to digging your grave a little deeper. The moment you realize that you are in a bad debt situation, you should not only stop applying for or accepting any new credit cards or loans, but should also cancel any new cards that do not add significantly to your credit limit.

Start Being Frugal: There are a large number of things that you feel you cannot live without even though you can. Premium channels on your cable, a costly internet connection, driving individually to work instead of car pooling and drinking gourmet coffee instead of the free stuff that is available at your office are some examples. Make a list of all your expenses and be brutal in cutting out on anything that is not absolutely necessary. Remember that every single penny saved is only going towards making your life better and more comfortable in the long run.

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