Smart Change: how to effectively manage your personal debt

One indicator that your debt is a problem is if your credit card balances keep rising. It’s best to pay credit cards in full every month. Next best is paying enough to whittle down balances over time.

‌Sometimes the first sign of debt trouble is that you ignore the signs: You don’t know what your credit card balances are, for example, or you just don’t open statements.

Your subconscious usually tells you when you’re in a danger zone, says Beverly Harzog, author of “The Debt Escape Plan.”

It may whisper at first, with headaches or sleepless nights. Other times it hollers. You can’t stretch your paycheck to cover all your bills, or you avoid money discussions with your partner.

But facing your debt is the first step toward mastering it. “I remember having a lot of headaches, even nausea, when I sat down and faced the music,” Harzog says.  But she went on to wipe out more than $20,000 in debt in two years.

You can combine any payoff strategy with debt consolidation, which rolls several credit card balances into one debt at a lower interest rate.  If you qualify for a balance transfer card or personal loan, it could help you pay off the debt sooner and for less money overall.

Track your progress and celebrate milestones: Rewarding yourself can help you stay motivated to pay down the debt, but don’t go overboard.  Think picnic in the park rather than five-star restaurant meal.

Your credit card balances keep rising. It’s best to pay credit cards in full every month. Next best is paying enough to whittle down balances over time. If your balances are growing, your financial worries are, too.At least one credit card is maxed out. There’s one exception: Don’t count a balance-transfer card you’re using for debt consolidation — provided you have a plan to pay it off while the interest rate is in the low introductory period.You can’t pay more than the minimums on your credit cards.You can’t afford to save for an emergency fund. Emergencies happen, so you need at least a small reserve to cover them. If a car repair would mean you couldn’t cover your regular bills, something needs to change.You’re late paying bills because you didn’t have enough money on the date they are due.You applied for credit and were rejected. That means creditors or card issuers see reason to believe you can’t or won’t repay money you borrow.You’re getting offers for credit cards for people with damaged credit — and you thought you had good or excellent credit. That’s a sign that something is tanking your credit.

Simply checking for these warning signs means you’ve taken the first step.  If one or more apply to you, keep moving along this path to turn your situation around.

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