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If you find yourself in debt, and you want to spend the New Year focusing on getting out of it, you might not know where to begin. How can you get your debt under control and make a plan that will not only help you with debt management, but also one that you can actually stick to? While your plan should be individualized to meet your needs, you can get started with these debt management tips.

  1. Know what and whom you owe. The first step in managing your debt is understanding it. You should make a list of all of your debts – from student loans, to overdue credit card bills. A good idea is to put this information in a spreadsheet or an Excel document. Make different columns for the name of the creditor, the total amount of your debt, how much you owe each month, and the due dates for the payments. This will give you a concrete way to not only keep track of your debt, but also visibly watch it disappear as you make your payments!
  2. Create a bill calendar. Just as you should make a spreadsheet of your debt, you should make a spreadsheet of your bills. Make columns for what the bill is (“utility bill”, “car payment”, “doctor appointment”, etc.) and allocate money to pay these bills. This will help you keep track of upcoming payments that you have to make so that you do not start to accumulate more debt. On this spreadsheet, you can also make a column for your paychecks and columns for any expenses you have, such as “food”, or “entertainment”. This will help you understand where every dollar of your money goes.
  3. Pay your bills on time. If you’re focused on getting out of debt, you want to avoid accumulating more debt at all costs. To this end, you should make sure you pay all of your bills on time. Even if you can’t allocate that much money each month to paying current debts, at least you can avoid creating more debt for yourself.
  4. Decide which debts are your priority debts. All debt is not created equal! In most cases, you should focus on paying off debts with the highest interest rates first. In many cases, this means credit card debts. Figure out which debts you need to get rid of as soon as possible and which ones have a smaller impact on your life.
  5. Recognize when it’s time to start over. It’s admirable to get your financial life back on track by managing your debt, but you should also recognize when your debt is just too significant, and it is a better decision to file for bankruptcy than it is to try to eliminate your debt by paying it off.

If you would like to discuss your debt management options with someone who has been where you are, please contact me. I can help you decide if you should file for bankruptcy or if another debt management option is better for you.