We live in a world where consumerism is promoted in every turn of the corner. We have more needs compared to a hundred years ago when credit was not as popular as it is now. There are even more unexpected expenses now than before so no one really has the right to judge anyone who has suddenly found himself with a lot of debts. Once you find yourself in that situation, it is crucial that you manage your debts well before it drags you even further into your woes.

Here are some tips on how to get on top of your debts:

  1. List all your debts. – It is very important to keep track of each and every debt you have so that you know which one to prioritize and which one to pay last. Also, some small debts may incur so many fees and interests that if you lose track of it, a small amount of money owed could become a small fortune to pay.
  2. Make a plan to keep up with payments. – Once you have a list of your debts, make a payment plan for each. Calculate how much money you can use each month to pay a part of your debt consistently. Pay high interest debts first or make larger payments if you can so that you can get rid of it as soon as you can. If your money is not enough to cover minimum payments for all, move the low rate debts down your list.
  3. Stop spending money you don’t have. –  Hide your credit cards. Don’t take any more loans. Stop spending on unnecessary things and prioritize your needs. Don’t worry about that much needed vacation or that pair of shoes you’ve been dying to have. Once you pay off all your debts, you can buy it with cash or you can enjoy a worry-free holiday because you didn’t have to take out a loan for it.
  4. Save some emergency funds. – Once you are on top of your debts and you are on track in keeping the payments up to date, try as much as you can to save money for emergencies. This will help you avoid unforeseen money problems down the road. In case your air conditioning breaks down, you wouldn’t have to risk your car for a loan. You can use the emergency fund you saved without having to add up to the debts that you are trying to manage.

If you have a number of debts scattered around, it may be tempting to consolidate them into one credit company or one bank so that it will be easier for you to keep track. This is a good idea but it is important that you consider how much fees you have to pay in order to get this done. If you will end up paying more, just keep your patience and leave your debts where they are and continue to make payments. It may take some perseverance but once you are done with one, it won’t take you long to get done with the others.