Managing Debt: Friend or Foe


Managing Debt: Friend or Foe


Debt is unfortunately, part of our every day life. Most of us have to incur debt to build a house, buy a car, get an education or build a business. However, how we manage debt is essential to helping us improve our lives and getting goals accomplished. When we don’t manage it well it becomes a burden or a stumbling block to our progress. Here are a few ways to make debt go from friend to foe.

Are you carrying too much debt?

All of us worry from time to time about debt but if it has been consuming you then chances are you are carrying too much debt. The easiest way to figure out if you have too much debt is if more than half of your income goes to paying your debt. If this is the case then you are definitely in over your head and you need to find means to change that quickly. Here are a few warning signs that you are definitely in the danger zone.

  1. Difficulty paying your bills on time
  2. Losing sleep worrying about debt
  3. Receiving letters from debt collectors
  4. Spending more than you earn
  5. Allowing bills to stack up
  6. No budget or spending plan

Here are a few ways in which you can put yourself on a path to recovery.

  1. Make a budget and track your spending

Tracking your spending for three months in order to understand your spending habits. After you have better understanding of where and how you spend your money its easier for you to make a realistic budget. There are numerous free tools on the internet that you can utilize to gain better insight into your spending habits. You are sure to see improvements once you begin to pay careful attention.

2.  Get a Consolidation Loan

See if the credit union can help you consolidate all of your debts into one loan with one payment at a lower interest rate. Avoid incurring additional debt once you have consolidated. You don’t want to end up worse than you were before.

  1. Cut your expenses – but wisely

The $200 a month you spend on buying lunch daily can be put to better use. You need to be honest with yourself about what you can live without but be careful not to push yourself so far out of your comfort zone that you set yourself up for failure.

Instead of forgoing lunch every day, perhaps you can buy lunch once per week. Allocate monies towards your weekly spend and remember when the cash is gone, it’s gone and it’s time to stop spending.

  1. Create a monthly bill payment calendar

Use a bill payment calendar (lots of free options on google) to help you figure out which bills to pay with which paycheck. Next to each one write the day that it is due then fill in the date of the paycheck. Doing so will ensure that you won’t miss any more payments and fall deeper into debt.