Debt Management Essay

There was a time in this country where parents were more worried about their kids using drugs, dropping out of school, but it’s sad to say that the most common problem in the United States isn’t drugs, natural disasters or even crime anymore but it’s the outgrowing debt problem, whether it’s public debt or a personal debt, It’s a cause for serious attention that it doesn’t seem to get. According to CareOne Service’s first “State of Debt Ranking” report, which the debt relief company released in early February, shows that the average American debt is more than $10,000.

The good news is that there’s not some magical, mystical formula to good debt management. The solution is common sense and having a plan for your total money makeover. Good debt management is 80% behavior and 20% head knowledge. It isn’t rocket science as some debt management companies try to make you believe. Is it easy? No. In fact, it’s really hard most of the time. But it’s worth it. You’ll be amazed how a simple determination and having a plan could change your life. Once you have a real debt management plan in place, it’s only a matter of time.

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I’ve personally applied few of these tips to manage my debt and I am very happy to say that it has worked for me, and I know for a fact, it will work for you too. Here are the few of the many ways you could maintain your debt and build a good credit. * Pay on time. Send a payment check well before the due date to avoid late fees and finance charges. Your credit score can adversely be affected by late payments, collections, and bankruptcies. * Stay within your credit limit to avoid penalties and reserve available credit for emergencies.

Show that you have capacity; the ability to pay back your debt, by keeping your account balances less than 50% of your available credit. * Set your own credit limit and start to establish a savings fund for emergencies. * Use credit wisely. Ask yourself the following questions before purchasing with credit: Is this something I really need, and do I need it now? Do I have the ability to repay? How long will it take me to repay? How much will it ultimately cost me? * Be honest. If you can’t pay your bills on time, contact the creditor and explain the situation.

Creditors will often work with you to come up with an alternate payment arrangement. * Be aware of the terms and costs when shopping for a student credit card, or a student loan. Be sure to pay your student loans as agreed. This long history of paying your bills on time will also help you build a credit history and improve your credit score. * Avoid opening joint accounts with a friend or significant other. Protect your account numbers, personal identification numbers (PIN’s), and social security number. Do not let others use your cards and don’t use your cards to pay for other people’s purchases!

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