According to the latest statistics, an average American household has a debt of about $18,000, meaning almost everybody is in deep debt. It is therefore prudent to learn how to manage your personal debts on your own. Though you can find debt managers that you can consult with, they can sometimes get you deeper in this hole that actually relieve you off your debt.
You can effectively manage your personal debts by splitting your expenses into two major parts – fixed costs and variable costs. Fixed costs are those that you pay the same way every month such as rents, insurance premiums, fees and others. Variable costs are expenses which you can control and even cut off. They can include $5 magazine that you buy everyday on your way to work. You don’t really need to spend $100 on magazines everyday for materials that you can watch on T.V and on the internet. Once you’ve reviewed your expenses, you can prioritize what you really need to spend on. You have to realize that debt repayment can become a painful process especially if you need to cut down on some luxuries such as regular pricey coffee from Starbucks or spa and massage treatments.
You should also combine all your personal debts and ask for a revised interest rate from your creditor. This is doable for many credit cards, you can request for a balance transfer and you get a lower interest rate on your new creditor. For personal loans on different category but coming from the same creditor, they can be combined and given an interest rate that is easier on your pocket. In paying off your debts, .5% to 1% savings is all worthwhile.
If you can, avoid taking services from personal debt managers. They ask for upfront fees which only increase the costs you are working to tone down. Have more discipline in using your credit cards and if you can, try pay your purchases in cash. Shift to some credit card with a lower interest rate or refinance your mortgage with another that has a lower interest rate. You can pay off your personal debts effectively if you can work your way around it. So start listing them down and start paying off the one with the highest rate. Getting rid of a loan worth $200,000 with 8.5 % interest means savings of around $16,000 each year! Plan, list, cut down unnecessary expense, reconstruct your loans, move with creditors offering lower interest rates and prioritize payback!
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Stuart Miles – FreeDigitalPhotos.Net
