With the new year just around the corner, many of us are thinking about our finances and how to manage our debt. While this task can seem a bit daunting at first, once you have a plan in place it seems to be easier to manage your funds.

The first task is to figure out how much you owe. It’s best to list your debts, be sure to include the creditor, how much you owe, monthly payment, the interest rate and the date your payment is due. Once you have all of your debts tallied, you will have a good idea of your debt to income ratio. Once you have created your list of debts, be sure to refer to it periodically. It is also a good idea to update this list every few months, to be sure it remains as accurate as possible.

Be sure to pay your bills on time each month. Most companies charge a late fee when you miss your due date, which can make your debt harder to pay off. Some companies will increase your interest rate if you miss two payments in a row.

The creation of a monthly bill payment calendar can be immensely helpful. This will help you to decide which bill(s) needs to be paid as your money comes in. Once you see what gets paid during each payment cycle, you may be able to pay a bit more to lower your debt faster.

It is also important to decide which debts you will prioritize to pay off. For instance, paying off credit card debt first, because credit cards often have a higher interest rate than other debts you may have. You can also choose to pay off your lowest balances first. This way you get a complete debt off your list, which can often be an enormous weight off your shoulders.

It is always a good idea to have an “Emergency Fund”. Building this can seem a bit overwhelming at first. It is best to start with a small fund, think $500.00 to $1000.00, then gradually build from that. Your goal should be to eventually have three to six months of expenses saved to help protect against unforeseen changes in the market or your cash flow.

If you feel overwhelmed by your debt, seek help. Our team at Perfect Balance can help you with:

  • Accounting Software
  • Bookkeeping Services
  • Budgeting
  • Cash Flow Management
  • Financial Analysis
  • as well as many other services to help you manage your debt.

Call us today to set up your appointment for a free, no-obligation consultation.