Personal debt management skills are a must have in today’s society. If you have bad credit, you stand the chance of having many doors slammed in your face. Having bad credit can prevent you from getting certain jobs, they can get you denied for car or house loans and they can even cause potential life partners to turn and run.
Your credit says a lot about you, your trustworthiness, your responsibility level, and your sense of commitment. If you want to raise your credit score so that you can open some of those closed doors, you’re going to need a debt management solution. Coming up with one is easy, the hard part is changing your lifestyle so that the debt management solution can work.
What You Owe Vs. What You Have
To come up with a debt management solution, you’re going to need to do a few calculations. Start with your debt. If you need to, get a copy of all three of your credit reports and tally up your credit that way. Once you have a figure to attach to your debt, that becomes your goal to pay off. Now, to complete the debt management solution, you’re going to have to figure out how much you have to pay off that debt amount.
Take your income that you take home each month after taxes are taken out. That’s your income. Include anything that brings you money. You can include your job, any child support, any side jobs you take on; anything that allows you to hold cash in your hand, or see the balance reflected in your bank statement.
Then, subtract from that amount how much you spend each month. Don’t just count the bills that come in the mail and the ones you pay online. You’ll also want to count monthly food expenditures, going out charges as well as any savings you put away each month. Once you subtract your monthly expenditures from your income, you’ll have your disposable income. That’s what you’ll use to create your debt management solution.
Raise That Figure
Take your debt and divide it by how much you have to pay off that debt each month. That’s how long, in months, it would take for you to pay off your debt with that amount of disposable income each month. Remember, that’s not counting interest. You’re going to need more advanced calculations to compute the interest, but this will give you a general idea of how long it should take you. If the time sounds way too long, you’re going to have to play with the figures.
Getting More Money
Getting more money for your debt management solution is where that life change comes in. You’re either going to have to raise your income level, lower your monthly bills or reduce your extra monthly expenditures, such as going out so often. Optimally, you’d want to do all three. If you don’t want to get a second job or ask for a raise, and you don’t want to opt for a smaller cable package or cell phone plan, the only other option is to reduce your unnecessary expenditures.
Don’t go out as often, buy the off brand food products and take the bus or ride a bike instead of using the car. When you make a lifestyle change, you’ll see it gets easier as you go on and you’ll soon see that debt management solution working.