How To Manage Your Debt

Debt management is complicated, and requires clear thinking and, often, help from a professional. Even if you’re not in serious trouble yet, you’ll know that your debt burden is getting out of control if you’re spending a serious amount of money combating interest payments without being able to seriously dent the principal anymore.

So, what steps can we take a look at today to help you manage your debt?

Get Counseling

The first and most obvious thing to do is to seek help from an experienced debt counselor. A lot of debts can be sorted out with the help of a counselor, who can advise you on how to control your spending, how to work with your lenders, and how to build better financial habits for the future.

Buy a House

It’s very counterintuitive to spend more money when you’re already in the hole, but it’s all a matter of protecting your total wealth. Paying rent essentially takes your money and throws it out the window; you can never get it back.

Getting a mortgage and buying a home, on the other hand, takes your rent money and slowly stores it in the value of your home (the part that isn’t interest on your mortgage). As long as the cost of living in the house is manageable, you’ll essentially be able to keep control of more of your net worth.

Even better, low and middle income families can get access to a variety of first time home buyer programs and down payment assistance programs that’ll greatly reduce the cost of buying a home. These programs exist specifically to help families to break out of the debt cycle and climb into the middle class.

Consolidate & Refinance

Multiple debts with different interest rates are very difficult to manage. Work to consolidate your debts as much as possible and make sure that you end up paying a fixed rate on your loan.

Fixed rates will make it much easier for you to set up a reliable budget that won’t have to be amended to accommodate rate changes over time.

Remember to Negotiate

If you’re dealing with a fairly large debt that you won’t be pay back in its entirety, you can and absolutely should negotiate with your lender. Lenders do not want you to go bankrupt, and they don’t want to destroy your life. They simply want to lose as little money as possible on the loan.

For the latest information and access to down payment assistance programs in your area: