Do you have debt? I'm going to guess that if you're like most other people in the world, that you probably have some sort of debt. Whether you consider your debt to be good debt or bad debt, you might have some. I personally have a ton of debt. Mainly in the form of my house for now. And I'm currently working on paying down my student loan debt that I accrued over 3 degrees.
If you're like me (or any other normal person out there), then you want to manage your debt. Below are some of my tips to properly manage your debt and hopefully decrease the amount that you have:
Total how much debt you have altogether
This most likely sounds very obvious and easy, but most people don't even know the actual dollar amount of how much debt that they have. Count everything: student loans, car loans, credit card debt, mortgages and everything else.
Actually, just yesterday me and my friend were talking about how much we owe in student loans (we are very open about our finances, no worries here). I asked her how much she had accrued over the past 5 years, and she said that she had no idea. She only knew the amount that she took out last year. I was shocked! But then again I wasn't that shocked because when I was in college, I never really thought about how I owed. It was definitely a shocker after I had graduated and finally totaled everything up.
Think of a game plan
Not everyone wants to attack all of their debt as fast as they can. WHAT?! For some reason a lot of people don't understand that. Some people want to attack debt super fast, but what about debt that is at a 0% or 1% interest? I have some debt at 0% that I only took out because I wanted to take advantage of the awesome interest rate. I saw no point in using cash when I could apply my cash to something else instead and actually get a monetary return.
How will you attack your debt if you decide to do so? Will you go to a debt management company? Will you pay off your debt that has the highest interest rates (in order to lessen how much you owe overall), or will you pay the debts that have the smallest amounts so that you can wipe out individuals debts faster? Some choose to wipe out small debts first because you might get more satisfaction from having one less loan out there.
Personally, I prefer to pay debt off that has the highest interest rate. This way I can then owe less money in interest. Interest adds up very quickly! Have you ever figured out how much you pay in interest PER DAY? It might be a couple of dollars a day, a couple of cents, but also maybe $50 a day is going towards interest. Crazy to think about. Maybe figuring out how much you are paying in debt every single day will help you want to pay off your debt even faster.
Subscribe to get the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom. Get our newsletter and get access to the freebie: