- Getting a handle on your family's spending habits and creating a realistic household budget is an important step in managing your debt. To truly understand how much money you spend, track all of your expenses for a month -- regardless of how small they are. Chances are, you're spending a lot more than you realize on your daily coffee and newspaper. Once you determine how much money you are spending, determine how much money you should be spending by analyzing your necessary monthly expenses and your income.
- One of the best debt management practices you can follow is to pay off your debts as quickly as possible -- particularly high-interest debts, such as credit cards and car loans. Begin by paying off debts with the highest interest rates first; although debts such as student loans and home loans may seem substantial, their interest rates are generally very low compared to those on credit cards and personal loans.
- If you just pay the minimum amount due on your credit cards and personal loans each month, it will take you years to reduce your debt. Instead, put as much money as you can possibly afford toward these high-interest debts each month to reduce the overall balances as quickly as possible. This strategy can save you hundreds or thousands of dollars in interest payments.
- Ideally, you should have a savings account with between three and six months of living expenses to account for an unexepected job loss, car repair or other significant expense. Even if you can only afford to put aside $10 or $20 a week, this money will add up quickly and will help prevent you from using your credit cards in the event of an emergency.
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