10 Ways to Manage Debt More Responsibly


Close-up of woman’s hand holding plastic card while going shopping in the mall

The term debt is commonly associated with an extensive list of buzzwords that can make any consumer cringe. Debt can actually be a positive thing, but it does have a way of accumulating quickly when not managed properly.  Many students and adults find themselves overwhelmed by bills past due, credit card payments, loan payments, high interest rates, etc. The key to reducing the financial strain is to take control of one’s own financial future, make a plan, change habits, and stay organized. These tips can help consumers use debt to their advantage.

1. Manage debt to build credit.

First off, debt is NOT a bad word. In fact, debt is what helps us buy houses, cars, and anything else that requires proof that you can responsibly pay back the money you borrow. Using your credit card and taking out loans will help you establish credit; the trick is to know your limits as to what you can plan for financially.

2. Figure out what you owe.

Spend the time to sit down and itemize the amounts you owe to lenders/creditors. Not only does it put your affairs into perspective, but it also gives you a good starting point for deciding which payments are more pressing than others. Be sure to write down every amount that you owe so that you have a visual guide for your plan.

 3. Determine which payments take priority.

You should prioritize your payments based on which ones are most essential to your survival needs. For example, medical expenses that are important to maintaining good health will take priority over student loans. However, student loans usually take precedent over a loan without collateral. It’s important to determine which payments should be made now and which ones can take lower priority in your budget. Just remember that all debts are important to pay off.

4. Sign up for a payment plan.

Payment plans are an excellent way to consistently lower the amount of debt you owe each month. Some companies, like Collection Management Services, will send friendly email reminders to help you stay current on monthly payments. The key to payment plans is to make sure your monthly income can cover your set payments, especially if you choose to sign up for an auto-pay feature.

5. Create a budget, and budget everything.

How much are you spending on food each month? Gas for your car? Average utility bills? Dog treats? Depending on how disciplined and aware you are of your spending, you may want to allocate a set amount of money for even the “small things.” There are several downloadable spreadsheets online that range from basic expenses to even the most detailed monthly purchases. When you go over budget, mark it red!

6. Send yourself a monthly bill.

After making your budget, determine how much money you can allocate to yourself at the end of the month. You would be surprised at just how far $50 per month can help your savings account grow. As time goes on, you may be able to adjust your budget to bill yourself for larger amounts.

 7. Establish an emergency fund.

As you begin to set aside money for yourself after each paycheck, you may want to consider building an emergency fund. This will help you cover last minute purchases without having to use your credit card as often.

 8. Avoid impulse buys.

We often look at credit cards as “imaginary money” that magically buy us the items on our wish lists. An impulse buy will most often be an item that 1. is not a necessity and 2. we cannot afford at the time of purchase. This results in higher credit card bills and debt accumulation.

9. Keep records of your purchases (they add up).

If you are notorious for impulse buying, try keeping a notepad on you when you go shopping. The simple act of writing things down will help you determine what your buying trends are, and it will make those “imaginary” expenses become a reality.

10. Work toward a purchase.

Even debtors can rightfully earn the items on their wish lists. When you want to purchase a product that is costly, add it to your budget and set a specific date for when you want to purchase it. The act of setting goals for yourself will make the purchase that much more rewarding. Try stashing your cash in a safe place each month and watch it grow until it’s time to buy that new phone you’ve been wanting.

Collection Management Services is dedicated to helping customers pay their debts responsibly to ease the financial burden for both the debtors and their creditors. Call us at 731-885-4349 or email us at info@collectionmgt.com to learn how we can help you with this process!

Comments are closed.