Managing Personal Finances in the Midst of Too Much Debt

Managing your personal finances in the midst of debt turmoil is challenging but with some self-discipline and a good strategy, it is not impossible. A little perseverance in weathering the debt storm goes a long way too. But when the debt situation seems overwhelming, too much attention is focused on the debt and not on ways to manage personal finances. The need for sound management of personal finances is important even in the midst of overwhelming debt. Let's look at some ways to effectively manage your personal finances in this situation.

Stop charging on your credit cards. Ignore those great once-in-a-lifetime bargains that come along when you don't have cash to pay for them. Consider that a bargain like this is no bargain at all once you finish paying the interest incurred on your credit card. The best way to stop charging on your credit cards when trying to get your personal finances in order is to not carry them everywhere you go.

Start paying on time if you still have the ability. When you are frequently late with your payments, late fees begin piling up and managing personal finances becomes reactive instead of proactive. When the late fees get applied to your credit card balances, it means more interest. Oftentimes, those in the midst of too much debt also have too many credit cards and it can be difficult to track when payments are due. Establish a reliable reminder system for yourself so that you don't make the mistake of missing due dates.

Keep paying even if you are behind. If your debt gets overwhelming, pay a little on it--even if it is late. Pay a small amount such as $10 if that is all you have. This may keep a creditor from closing an account on you and turning it over to collections which will have a greater impact on your personal finances. It may prevent a creditor from suing you in court. This all depends on the creditor's policies but at least if you are taken to court, you can show that you did your best.

Don't panic if things are getting tense. When you have fallen behind on payments, your telephone starts ringing and every call is pressure for you to pay. Understand that these call center personnel are only doing what they are paid to do. Don't take it personal, don't heed all their advice, and don't make promises you cannot keep. These companies are notorious for asking you to take out another loan (like a cash advance or payday loan) so that you can make their payment. Don't do it because you will only make your debt problems worse and make it difficult to manage your personal finances.

Cut the expenses in your personal finances as quickly as possible. You cannot cut your expenses unless you know where your money is going. Many expenses are related to entertainment, gadgets, and leisure activities and they can be difficult to cut back on. In other words, what too many do is cut out all the fun in their lives and are struck by overwhelming dullness and boredom. The idea here is to reduce your expenses. For example, if you like to dine in restaurants, don't go as often and don't order alcoholic beverages. You will be pleased at just how much you will save on dining out and you will still be able to keep some of your diversion.