Debt Management begins with first assessing the situation. Grab a notebook and start keeping track of your spending. This will be your debt diary, much like a food diary dieters use. After a week or two, look thru your debt diary and start looking for things you can cut back on. The goal is to try to start paying down debt. Do you eat out more than you should? Think about taking your lunch to work a few days a week. Addicted to Starbucks? Start weening yourself off the expensive coffee!
Seek counseling. For some people, their debt problems are caused by uncontrolled spending, lavish lifestyles and mismanagement of their finances. If such is your case, it is best to seek help from a trusted credit counseling agency. A legitimate credit counseling agency will help you find ways on how you can get rid of your debts and how you can improve your budgeting skills.
Talk to your creditors. Usually, a borrower’s first instinct is to hide from his creditors. But ignoring your debts or hiding from your creditors will only aggravate your situation. If you fail to submit a payment on time, don’t wait for the creditor to try to contact you. Instead, contact your creditor yourself and advise them that you may be late with your payment and explain your situation. Ask for an extension and in most cases, a creditor would be willing to give you more time to submit your payment.
Beware of Prepayment Penalties
Watch out for prepayment penalties. If you obtained a mortgage loan from a subprime lender, read the fine print! Many subprime lenders included prepayment penalty fees in their contracts. These fees can cost you thousands of dollars. If you think that paying your loan ahead of time will help you save $1000s over the life of your mortgage, you may find yourself with a big bill if you pay it off too early!
Be consistent with your payments
Always pay on time. Even if its just the minimum due. Make it a point to pay more (if you can) later that month. But make sure you don’t pay it late! Not only will you lower your credit score (and a late payment effects your score for months! The more times you pay late the more it effects your credit score), but you will also incur a late fee! Also keep in mind that a lot of credit card companies have it in their contract that if you pay late they can increase the interest rate they are charging you. It also nullifies any balance transfer rates you may have received from the credit card company.
The importance of paying all your creditors on time cannot be overemphasized. Paying late is also usually the first sign of a mounting debt problem.
Don’t Fall For Get Money Fast Tricks
Too many times people faced with a problem want a quick solution. If you tell someone diet and exercise is the best way to lose weight, what do they do? Go out and find a pill that will help them lose 10 lbs in 3 days! The same is true for people facing a large debt.
Patiently tracking your spending, getting an extra job, even starting a home business, can help you to get out of debt. But the following activities will only leave you worse off from where you started! I mention these only because I have had clients come into the bank in recent months looking for personal loans to try to dig themselves out of trouble because they fell for one of these.
There are alot of legitimate opportunities, but then there are also a lot of scams. Use your common sense when reviewing opportunities. Make sure the opportunity “fits” you! If it calls for you to go out and recruit a lot of people and you are an introvert. The opportunity isn’t for you, even if it promises an extra $1000 a month! If it cost more money then what you can safely spend, don’t join!
Quick Cash From A Cash Advance? BAD IDEA!
Don’t use your credit card for cash advances. Never use your credit card to take out a cash advance unless it’s really an emergency and there’s no other way for you to get money. Cash advances are not included in your credit card’s grace period and will cost you high interest rates and transaction fees the moment you take out your cash.
I Buy Your Home Fast Agents
Make sure you know who you are dealing with. Some of these companies are legit and will make you a fair offer. While some will give you WAY below market value for your home. Keep in mind this is a business and some of these agents are out just to make a quick buck. They are counting on you being so desperate for cash, that you will accept a lot less then what the house is worth.
If you follow these tips and focus on paying off your debt, you will see your credit score naturally start to improve. And practicing these good habits will make sure that you never have to worry about having bad credit in the future!