Financial management can be tricky on its own; add debt management to that and many people can be overwhelmed by the weight of paying off debt and balances owed. But debt management doesn’t have to be difficult; by taking a few steps and mastering the formula of debt repayment, you can get back on top and be debt-free in no time.
Easy Steps To Manage Your Debt
Step 1: Pay Your Bills on Time — Consistently.
Sounds easier than it can be, we know. But, if there’s one thing you can do to protect your credit while you pay down debt, it’s making sure you pay your bills on time — every month. Not only can late payments affect your credit score, but they also open doors that allow creditors to alter your credit limits or interest rates. Nobody wants to pay 25% interest, so make sure you are hitting those due dates. As a better practice, set up direct drafts where possible, or utilize Spero’s Bill Pay through MONEYLINK℠ to pay all your bills online, in one easy place.
Step 2: Build an Emergency Savings Account.
Once you’ve got your payments in line, start pushing money into an emergency savings account, to provide a level of insurance against future obstacles that may arise. Most experts recommend keeping somewhere between $1,000 and $1,500 in this account, to be used only for insurance deductibles (in case of a medical situation or car accident, for example) or large purchases (like when your air conditioning goes out in the middle of a 100-degree summer). Fortunately, Spero Financial offers a number of options in savings accounts — including high interest savings accounts and money market accounts — so you can start building your emergency buffer today.
Step 3: Consolidate Past Debt with Lower Interest Rates.
It’s hard enough to pay down debt, but high interest rates can keep you from making much progress at all. As a practice, go through and determine all your debt — balance owed and interest rate charged. Quickly pay off small balances if you can, and then focus extra payments into your highest interest rate. Sometimes, you can call your creditor and negotiate lower interest rates, if you’ve kept up payments and your account is in good standing. You can also refinance car loans, saving hundreds or thousands of dollars in interest alone. As another option, consider a personal loan through Spero to consolidate your debt and pay it off quickly at a much lower interest rate, making serious progress in a short period of time.
Step 4: Use Available Tools to Manage your Finances.
Most financial institutions — and creditors — offer a number of tools that you can use for your benefit. At Spero, examples include free credit checks so you can watch your score improve over time; other options are online bill payment and automatic draft.
This material is for educational purposes only and is not intended to provide specific advice or recommendations for any individual.