Managing Over $10000 In Debt
Debt management is something that everyone must practice, yet many overlook. This is especially important when your unsecured debts have exceeded the $10,000.00 mark. Many statistics have shown that this key level of debt can signal financial success or failure. Managing your debt is crucial to financial independence and can be accomplished quite simply.
First Steps To Debt Management
As everyone is well aware, credit scores play a very significant role in debt and debt management. Borrowing money, either secured or unsecured, becomes more expensive when scores are low. Managing your credit score so that it remains high is your first step to money management.
Credit scores are affected by high balances on credit card debt, late bill payments, and charged off debt. All credit card balances should never exceed the range between 50 and 60% of the available credit. Credit card utilization should ideally be much lower in the 0 to 20% range.
Bill payments should be placed on auto-pay for monthly payments, and scheduled two days prior to the due date. Never schedule a payment for the due date, processing errors can cause the payment to be late. Applications for new credit should be limited to no more than two applications in any 30 day period.
Next Step For Debt Management
If you have high interest credit cards with large balances, you need to pay these cards down or off first. Utilize low interest balance transfers to other credit cards, home equity lines of credit or personal loans to take care of these debts. When you are making minimum payments on high interest credit cards you are, in a way, paying for nothing. These cards are designed to take as long as a mortgage to pay off, something many consumers do not realize.
Final Step For Debt Management
Once you have began paying down your debt you must commit to keep your spending under control. Many people will follow through with the first two steps of debt management only to charge-up the high interest credit cards again.
Debt management is a three step process. You must keep a good credit score to reduce borrowing costs, you must reduce high interest debt and you must control spending. If you are able to do this, your debt, regardless of size, will be manageable.
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