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Debt Management Tips for Every Individual

March 26th, 2009

Denied? Due to bad credit?Today’s article on debt management tips was discovered in one of those folders that I have had on my hard drive for a while but never got around to actually using. It provides some good general advice for managing an individual’s finances, including any debt that you have managed to acquire. Of course, these are exactly the kinds of tips that our federal government will never follow, which is why the national debt of the USA is now over $11 trillion.

When the guy from Blue Dart knocked at Joe’s door you could notice that his face had become tense. It was a reminder from his lender that the amount overdue had to be paid. Actually Joe had to pay $330 to the lender, but was unable to pay the amount due to lack of finances.

The hero of the story can be anybody, even you! Today paying off your creditor(s) is the single biggest problem facing many people. It is very important that we understand the importance of saving money and do not unnecessarily burden ourselves with debt. Here are a few debt management tips that we can follow to reduce our debt considerably:

Using Your Credit Card

How you use your credit card will decide if they are a blessing or a curse to you. If you use your credit card to pay your grocery bills, your utility bills, or other expenditures which are absolutely necessary, then credit card can be a very useful tool to manage your finances. The only condition is that the bill needs to be paid on time so that you do not incur any late payment charges and interest. On the other hand, if you use your credit card for excessive luxuries, then your credit card becomes a plastic devil in your hand.

Spend what you can afford

It is very important that you spend money on a product or service only if you can afford it. Just because your friend is having a party every weekend does not mean that you have to throw a party once every week. See what your budget permits you to do. It is very important that you keep track of your expenses. Plan out your expenditure for the year and find out how you can actually arrange funding for it. Always keep in mind that you have to keep some part of your income for certain unforeseen events that might happen during the year. Try to curtail your expenditure as much as possible.

Save for Yourself

The first thing that you ought to do when you receive your income is that you should deposit at least a small portion of it in a savings or retirement fund that you have. Don’t wait until the end of the month to deposit the amount, because chances are that you will not have any amount left to deposit at the end of the month.

Setup an Emergency Fund

It is important for every individual to set up an emergency fund. This fund will be of great help when an unforeseen financial crisis arises. Try to maintain an amount equal to six months of living expenses in the emergency fund. This fund can at times be used to purchase a house or a car, but do not under any circumstance use the fund for your entertainment expenses.

Adequate Insurance Coverage

It is very important that you and your family are adequately insured. You do not know your future and it is very important that you are prepared for the worst case scenario. So call up your insurance agent and find out what coverage plans are best suited for you and your family.

There is an old expression that still seems to apply to times like these. Roughly paraphased it reads, “money saved is money earned.” Manage your finances well and cut down on your expenses so that your future can be prosperous.

2 Responses to “Debt Management Tips for Every Individual”

  1. comment number 1 by: debt reduction

    Karlonia, thank you very much for your post. I believe this is very sound advice. I am going to have to sit down with my wife over the weekend and review all of our options. Thanks again for the post!

  2. comment number 2 by: Debt Adviser

    Congratulations for writing such a great post on Debt Management. Keeping the current economy status in mind, it is really important to manage debt with tight hands by taking up several debt management programs. These services do not only help in consolidating debt but also help in exploring several possibilities open for any individual. Along with this, debt consolidation program also help in consolidating several monthly payments into one, making a budget as per the earning and also avoiding harassing calls from creditors. So in total a great job done.

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