When debts start piling up, the ability to discern between a good debt and a bad one seems to decrease. However, the best thing to do is to create a debt repayment plan that you can stick to. The best way that you can do that is to get professional help from a credit counselling agency that has the expertise necessary to deliver a manageable repayment schedule through a complete analysis of your financial situation.
The first step in creating a debt repayment plan is figuring out how much debt you actually have. Although it may be scary, you need to take this step in order to be able to develop a reasonable plan. You need to have all your debt information in one place, including current balances, interest rates, and minimum monthly payments.
The minimum monthly amounts may not be much, but that is what you have to pay each month with no exceptions. If you are able to negotiate better interest rates with your creditors or have your credit counselling agency do it for you, you will have one smaller and more affordable amount to pay each month. If you decide to actually create and implement a debt repayment plan yourself then you have to be ready for some discipline.
Your next step is adding a reasonable amount of money that you can really afford to your monthly minimum payments. This amount you will be using to pay more on your loan with the highest interest rate. That loan is the most expensive and is the one that you need to get rid of as soon as possible. That is a good debt repayment plan if you can stick to it and the only way to stick to it is to prioritize your expenses and understand your budget.
Whatever you have left over after paying your monthly expenses is what you have to work with to repay your debt.. Your monthly expenses need to be as clear and well organized as your debt payments. Put debt and expenses together and deduct the entire sum from your income. What you get is what you spend. Not a cent more!
You may have to implement some lifestyle changes for you and your family. You will have to carefully analyze how and why you may be in the red each month. It is important that you are aware of your expensive habits and that you refrain from overspending. It is not easy. It takes a lot of discipline but everyone can become debt free if they commit to their debt repayment plan.
A credit counselling agency can help you develop a realistic plan that right for you. The better prepared you are, , the easier it will be to find a debt management solution for your particular financial situation.