The Keys To Successful Debt Management

It’s not bad enough that the economy is weak and the job market is lousy but to top it off you are in debt.   You personally can’t do anything about the economy or the job market, but you can do something about your debt.

Good debt management serves two purposes, 1) it will help you save money on interest and fees 2) it will improve credit scores.   This article will explain the steps you can take to help you do both.

Step #1 – How Bad Is Your Debt?

Before you move forward you need to know your starting point.  To create a successful debt management plan you first need to know how bad your debt is.   Determine how much debt you have and how much you pay out each month to pay that debt off.

You can speed up your debt management process once you get to know your numbers.

Make a list of each credit card; the balance; the interest rate and the minimum monthly payment.   Don’t forget to include your mortgage, car payments and any other loan payments on that list.

Step #2 – How Is Your Debt Compared To Your Income?

Financial experts suggest that 35% is the maximum debt-to-income ratio you should have.   For example, if your annual income is $50,000 your maximum debt total should only be $17,500.

To determine your debt-to-income ratio, add up your monthly debt expenses (excluding groceries and other living expenses) and divide total by your gross monthly income.

Step #3 – A Plan To Reduce Your Debt

Tough times require tough measures.  If you truly want to become debt free, you must manage any credit card debt that you may have.

If the highest percentage of your debt comes from credit cards, you are not alone.  It is so easy to rack up credit card debt and so hard to reduce it.   Think of how a dieter feels, it’s so easy to add the pounds and so hard to eliminate them.   You will reduce your debt more quickly if you work from a plan.

Financial debtConsolidate

You may consider consolidating your credit cards.   Go back to the list you made of all your credit card balances and interest rates and find the lowest interest rate.   You can transfer all of your credit card balances to that card with the lowest interest rate.


You may be able to negotiate with the credit card companies.   If you have been a great client, you can ask if they can either waive late fees or lower the interest rates.

If you are in debt because of credit cards plus auto or student loans, you may be able to negotiate with your loan company.   Remember that loan companies would rather have you pay something towards your loan than have to write off that debt.

Get Credit Repair Help

In addition if your credit card debt is to the point where it has affected your credit score, you may consider getting credit repair help.  There are credit repair counselors you can work with, sometimes for a small donation or in some cases for free.

Your debt is the one thing you can call yours.   You created it, so it’s up to you to reduce or eliminate it altogether.   The best debt management advice is to learn your numbers and to then work from a plan.