by Marco Angioni II

Created on: February 01, 2010   Last Updated: February 02, 2010

Having debt or being in debt does not have to cause havoc to your financial situation.  However, if you do not successfully manage your debt, you will soon learn that no matter the complexity or sophistication of your budget, you will not be able to successfully manage your money.  As such, the following tips will help you mange your debt and thereby, successfully manage your money.

Stop Accumulating Debt:

One of the most common reasons that people cannot achieve financial security is that they cannot refrain from accumulating debt.  Some people make a payment on their credit card debt, but still use the credit card.  These same people complain that their debt balances never seem to drop.  As is obvious, their credit card debt balances are not dropping because they continue to use the credit card.  If you want to manage your debt, you first have to control it. 

Controlling your debt requires that you stop accumulating it.  This is not a novel idea.  In fact, if you were to use any one of those “credit card debt help” companies that you see advertised on television, one of the first things they would do is close (with your consent) your “problem” credit card accounts.  The purpose of this is so that your debt payments actually help.  It makes perfect sense.  If you make payments on a static amount of debt, it will decrease.  If, however, you continue to increase the amount of debt by spending money, your payments will not decrease your debt.

Create a Payment Schedule:

Once you stop accumulating debt, your debt payments will become very predictable.  In other words, you will know actually how much you owe every month.  Knowing this will greatly help you make a money plan.  If you know how much you have to pay each month for your debt, you can set this amount aside from each paycheck so that as the bills become due, you can timely pay them.

This degree of consistency and predictability will greatly help you in your quest to better manage your money.

Automate The Process:

If you have trouble remembering to pay bills or it is just too painful for you to write the check every month, you should try automating the process.  Automation brings another level of consistency, predictability, and organization that is necessary to successfully manage money.

Most of the larger banks (e.g., Bank of America, Chase, WellsFargo, etc.) provide their customers with free, automatic bill pay.  If your banking institution has one of these programs, it is in your best interest to setup the process and automatically pay your debt bills each month.

By having control over your debt and by creating consistency, predictability, and organization, you will obtain complete control over your finances and hopefully as a result, your life.

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