How to manage debt

It may seem absurd to talk about. Truthfully, it comes with life’s baggage. Rather say, it is inherent in human existence and inevitable. Debt is any amount of money which needs to be repaid back. It is an obligation that requires one party, the debtor, to pay an agreed upon value to another party, the creditor. Debt may be owed by individual, country, local government or company.

Debt and loan are used synonymously but there are slight differences. Debt is anything owed by a person to another and can involve real property, money, services or other consideration hike loan is a form of debt more specifically an agreement in which one party lends to another including how payment should be made and interest rates. People are more likely to get into debt due to several reasons from the use of credit cards and cash for purchase of products and services to little or no accessibility to affordable credit. Debt comes in myriad forms and source, some include personal loans, overdue bills, utility bills, credit card debt, overdue/unpaid taxes, buy now pay later, mortgages. However, not all debt operates in the same easy so it is important to understand debt, it’s expectations and consequences.
One time rule about debt is that if it has future value and increases your net worth, it is good debt but if it does not do that and you do not have cash to pay for it, it is bad debt. Good debt allows you to handle things needed and unforeseen emergencies such as a student loan, mortgage, buying essential items, investing in yourself, small business loans e.t.c. Bad debt ruins your financial health. if it loses value the moment you take ownership, it is bad debt and this describes many of life’s basic necessities like material things such as brand new clothes e.t.c. if you can not pay cash for such items, you should at least consider settling for off brand clothe e.t.c. Some bad debts are payday loan, credit card debt, interest rates loans/debts and so on.

Debt management is how to set one’s debt under control through financial planning and budgeting. Using thee strategies to lower current debt and eliminate debt completely. Managing debt is a process that involves determination, discipline and consistency. Everyone with a little debt or more has to manage their debt. There are effective ways to manage debt.
Know your debts. Know how much you owe. Make a must of your debts, the creditor, total amount of the debt, monthly payment, interest rate and due date. Refer to the debt list periodically and not just to forget about it. Take account of your accounts.
Compare what you earn, owe and spend. Know how much you earn, how much you spend and where the rest is going. This will help you identify where there may be room for adjustment. Checking your credit report is always a good idea. It also helps to make sure you have not forgotten about an outstanding debt. Also, an honest look at your expenses monthly can help curb overwhelming debt condition.
Keep up your payments. Ensure your payments are maintained and make sure the debts do not go out of control. Put in more efforts into paying off your debt. Pay your bills on time. Late payments make it harder to pay off debts. Make minimum payment. In the event that you cannot afford to pay anything more, make at least the minimum payment. Ensure that there is real progress in paying off your debt.

Prioritize your debt. Decide which debt to pay off first. Use your debt list to prioritize. Sometimes, knocking off smaller debts first can build confidence or pay off balance with the highest rate, either day way you are taking steps in the right direction, so stick with your plan. How you attack your debt is up to you.
Build emergency finance. Build an emergency fund to always fall back on. Work towards creating emergency fund, no matter how little. It is always enough to cover up an emergency expense.

Have a back up plan. It is healthy.
Debt management is important for wealth accumulation strategies. In overall, you can also seek professional help to assist in the process and procedures of debt management.