Nine Tips to Help Manage Debt

By FINRA Investor Education Foundation Staff

Rucking 70 pounds, dragging an anchor or slinging cargo. Soldiers, sailors and airmen know these are things that will slow your advance. Debt has the same effect; it can slow or even prevent you from reaching your financial goals. Here are nine tips to help you lighten your debt load:

1. Complete a personal financial inventory. Knowing how you got into debt will help you find the right solutions to get out. Find out what you own, what you owe and how much you're spending. This will help you figure out how you can trim your spending in some areas to find the money you need to repay your debts. Get your financial inventory started by calculating your net worth, tracking your spending and building a spending plan.

2. Put away the plastic. If you find yourself over your head in debt, stop using your credit cards. Use these tips to help you curb your dependence on credit cards. Once you have your credit card spending under control, focus on paying down the debt you have. Keeping a balance on your card means you will pay interest and, possibly, fees to the credit card company.

3. Call your creditors before skipping payments. If you think you can't make a payment, call the business you owe money to and ask for more time. If you make the call before you miss a payment, the business often will be more willing to work with you.

4. Talk with the financial counseling personnel on your installation. They can assess your situation and offer advice to help you get out of debt. They will also be able to refer you to local programs designed to help military personnel and their families.

5. Consider working with a nonprofit debt counseling service. Your Family Services or Support Center can help you locate one in your area. You can also contact the National Foundation for Credit Counseling to find a credit counselor in your area. Visit NFCC.org or call (800) 388-2227.

6. Pay your high interest rate debt first. Work on paying down the credit card or loan that charges the highest interest rate first. Set a goal to pay a specific amount toward that debt each month, while putting minimum payments toward your other credit cards or loans. When that high interest debt is paid off, apply the extra money to the debt with the next highest rate. In time, you'll pay off your debts and save big bucks in interest.

7. Mail your payments early. When paying your credit card bill by mail, take extra care to mail your payment early, so it can be posted to your account on time and avoid late charges. When making the payment online or by phone, find out when the payment will post to your account. Some companies wait a day or two before posting your payment, so you need to make the payment a day or two before the due date. Late payments are expensive (often $35 or more) and hurt your credit history.

8. Avoid settlement or credit repair scams. There is no such thing as an easy fix to getting out of debt or repairing a bad credit record. Stay away from services that require up-front fees or "voluntary contributions," guarantee they can make your debts go away or promise you will pay only pennies on the dollar.

9. Consider bankruptcy a last resort. Some people think bankruptcy is the only option when their debts become too much to manage. Servicemembers, however, may have several other options. If you are considering bankruptcy, talk with a financial counselor at your Family Services or Support Centers first. Bankruptcy is a last resort—it has long term consequences and may not provide the debt relief you seek.

Keep advancing toward your financial goals. Don’t let a heavy debt load slow you down. For more tips and tools on managing credit and debt, visit SaveAndInvest.org.

Tip of the Day

  • Written by Guest Blogger | June 17, 2014

    Teach your #kids about finance - start with the #Money as you Grow program >> http://moneyasyougrow.org

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