Debt Management Tips for Quick Pay Off

You screen your telephone calls, feeling guilty about the debt collection calls that keep coming in. You don't bother opening the piles of bills that fill your mailbox every day. And every day, the debt gets bigger and bigger, and you lose all hope of ever paying it off and becoming debt free.

There is, however, hope. No matter what your debt level, it is possible to pay it off with these debt management tips. They cannot only help you deal with collection agencies, but avoid such horrors as judgments, liens, and bankruptcy.

Organize debt

Your first step in managing your debt is organizing it. Make a chart of all your debt including total amounts and interest rates. You can do this on paper or in a simple spreadsheet program like Microsoft Excel. You can also use a personal finance software program for your computer.

Chart payments

After listing all of your debts, you should right down two things. First, write what the minimum required payment for each debt is and, second, write down how much you can budget for each debt. Use an online calculator or your own mathematical skills to determine how long it will take you to pay each debt with each payment method. Don't forget to factor in interest rates to your equation.

Which debt to pay first

Once you figure out how long paying off your debt will take, and how much interest charges will cost you, it should be pretty easy to determine which debt to pay off first. You should start by paying off the debt with the highest interest rate usually. This way, you will pay less overall.

Snowball Method

Make a new list of your debts. List them from the highest interest amounts to the lowest interest amounts, and then write down your monthly payment amount below each. Skip the first debt column and just write the minimum required payment under each of the other debts. The first debt, the high interest one that you want to pay off first, should get a payment that includes every extra penny that you can squeeze from your budget. Paying off a lot on one debt at a time is part of the snowball method of debt payment.