These debt management tips will show you how to:
Tell if you have 'good' or 'bad' bills
Pay off all your bills
Enjoy living debt free
When you're buried in debt, the thought of paying it off seems nearly impossible. But, if you have an organized plan to pay it all off, you'll be living debt free easier and faster than you can imagine.
What kind of bills do you have?
Before you begin to develop a plan to pay off your debt, you first need to know what type of bills you have - good or bad. 'Good bills' increase your net worth over time. 'Bad bills' on the other hand do not increase your net worth. Bad bills are usually credit cards used to purchase consumer goods that typically decrease in value. An example of a good bill would be student loans. Student loans allow you to obtain a college education, which will allow you to obtain a better job, so they are considered a good bill to have. Another bonus is the interest paid on student loans is tax deductible. A mortgage can also be viewed as a good bill since houses typically increase in value over time.
As mentioned above, credit cards with excessive balances are considered bad as are consumer loans with excessive balances. The goods purchased on this type of credit typically decline in value, or even wear out, or are lost before you have paid them off!
But, what about a car loan, is that bad? A car loan is somewhere in between good and bad. It's bad in that a car decreases in value the minute you drive it off the car lot. But, not many people have the cash to buy a car so, it is necessary to take out loan to purchase a car most of the time. And, a car loan can be viewed as good in that it allows you to get to work everyday to earn a living.
Your best bet is to limit or get rid of credit card bills altogether. So, let's talk about debt management tips that will allow you to pay off your bad bills and eventually your good bills too.
Pay off debt and enjoy living debt free
You'll want to develop an organized plan to pay off your bad bills first.
First, write all of these bills down and include balances, creditors, interest rates, and the monthly minimum payments.
Second, contact each creditor and explain your situation requesting a reduction in the interest rate.
Third, organize your pay off list developed in the first step in descending order with the highest interest rate bill first.
Fourth, tighten your belt and limit any extra expenses and use the money saved to begin paying off your bills.
Fifth, take the money from the fourth step and make a payment to the bill with the highest interest rate while paying the minimum payment on the others.
Sixth, once that bill is paid off then take that payment and apply it to the next one on the list.
Seven, repeat over and over until all of your bad bills are gone.
Once you're done paying off the bad bills, then work on paying off any car loan(s) the same way by applying payments you were making on all the other bad bills to the car loan(s).
Once that's done, move onto the good bills like student loans and pay those off in the same manner. Then move onto paying off your mortgage! Yes, it can be done.
Just think, one day soon, with these debt management tips, you'll enjoy living debt free!
Samantha Buck is a Professional Organizer and Editor of http://www.LifeOrganizeIt.com/debt-management-tips.html, where you will not only find solutions to life's organizing dilemmas, but also debt management tips. Subscribe to the free organizing magazine "Organize It Mom!" at http://www.lifeorganizeit.com/free-e-zine.html for super easy tips and techniques to get yourself organized. Not just for moms, this free organizing magazine will help anyone get organized!
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