The best rule of thumb for managing debt is an easy one: Don’t spend more than you earn. It sounds simple. But considering the multitude of options out there — from credit cards to personal loans — it’s also possible to lose track of how much you owe and to whom. It can be easy to lose sight of your financial well-being without even realizing it.

In our society, debt is a part of life. Debt can help us get an education, buy a car, own a home, or expand our business. When debt is managed well, it is a stepping stone that enables us to improve our life and get things accomplished. However, if debt is not managed well, it can become a stumbling block and hinder our progress rather than move us forward. If you would rather have debt as a friend than a life-long foe, this is for you.

With any debt scenario, it’s always wise to paint a clear picture of where you stand financially and where you hope to stand.

Diagnosing your debt

Unsure if your debt is out of control? Ask yourself the following questions:

  • Do you use one credit card to pay off another?

Credit cards are not free money. By using cash advances or running up a balance on one card to pay off another, you risk actually paying more in interest.

  • Do you frequently open new lines of credit?

This approach can sometimes seem like it’s helping pay off your existing debt, but it can also create even more debt. Applying for each credit card offer you receive can result in higher, unnecessary debt. Stay within the comforts of your budget.

  • Do you pay only the minimum amount on your credit cards each month?

This means you’re carrying over more debt from month to month — which only gets larger with monthly interest. Try paying off the full balance on your cards each month.

  • Do you make your monthly payments late — or maybe not at all?

If you don’t have enough cash to pay off any loan or line of credit, you could be spending more than you make. Timely and consistent payments are key to maintaining good credit.

  • Have you “maxed out” at least one credit card?

Although some credit card issuers will increase your limit, simply reaching your credit limit can negatively affect your credit score.

If you’ve answered yes to any of these questions, consider trimming down your debt. It’s not always easy. And it often requires sacrifices or life changes. But in many cases, it’s both achievable and liberating.

Keeping a budget helps ensure you have enough money to cover all your expenses each month. Plan far enough in advance and you can take early action if it looks like you won’t have enough money for your bills this month or next. A budget also helps you plan to spend any extra money you have left after expenses are covered. You can use this extra money to pay off debt faster.


14 Day Financial Detox Challenge

A financial detox is the process of giving your wallet some room to breathe. It’s pressing reset on your spending habits. And it’s being more intentional about how you view and relate to money




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