How to Put the Brakes on Debt

While it might seem like your debt accumulates out of nowhere, if you pay attention to your finances and look for patterns in your spending habits, it’ll be fairly easy to see how you ended up in debt.

Here are some tips to keep you on top of your finances and to help you do your best to mitigate your debt before it spirals out of control.

Don’t Just Rely on Your Monthly Statement

You should be checking your bank account regularly rather than just waiting for your statement every month. Online banking makes it easy to get a good idea of exactly how much you owe at any given moment. Whether you prefer to log in on a computer or you download the app to your phone, do your best to make sure you always have a good idea of where you stand financially and make your purchasing decisions accordingly.

Don’t Shuffle your Debt Around

If you have more than one credit card, it can be tempting to merely shuffle your debt from one card to the other when you get a new statement, but all that does is prolong the inevitable: eventually your debt will grow to the point where you can no longer shuffle without consequence.

Instead of trying to get one over the banks, focus on saving more money each month so you can afford to pay down more of your debt.

Try to Pay off Smaller Debt Faster

If you have numerous sources of debt, a great option to help get you out of the hole while simultaneously raising your credit score is to pick the smallest one and pay it off completely. If that debt is from a credit card or line of credit, the key is to keep the account open once it’s been paid off even if you don’t plan on borrowing any more money from it because closing the account will actually have a negative effect on your score.

Always Pay more than the Minimum Payment

As appealing as the thought of merely paying the minimum payment might be, it’s the easiest way for your debt to grow at a dangerous rate. Only paying the minimum payment is a stalling tactic that will eventually come to haunt you. Not only does your core debt grow, but the interest you’ll also have to pay back accrues at an alarming rate too. What was once a $500.00 debt will balloon into something that costs you thousands of dollars if you’re not careful.

Carry Cash

The more you can carry cash, the better. Cash is the most tangible form of your money available and people tend to be far more cautious when spending it than they would be with a credit card because they can actually see their money decreasing as they shop.

Carrying cash forces you to really pay attention and understand just how much you’re spending on any given day.

Don’t Ignore the Problem

Acknowledge your debt. Come to terms with the fact that you owe money and that you need to pay it back. Force yourself to open every credit card statement. If you can’t even admit to yourself that there’s a problem, you’ll never be able to confront it properly. And don’t be afraid to ask for help if you need it.

Need help managing your finances and coming up with a plan? Apply online here.