AEM Mortgage Minute with Deanna Daughhetee

You’ve heard it before: it’s easier to get into debt than it is to get out of debt. But you may not be aware how easily you can manage your debts – simply by following a few easy steps.

Start with the basics. If you haven’t established a budget, you should begin to keep track of how much money you have coming in each month and exactly where it’s spent. A budget is your game plan for your finances. A budget will tell you whether you’re living within your means or whether you’re spending too much money, so you can make the necessary adjustments to your spending habits. There is an old saying—“most people don’t plan to fail, they simply fail to plan”. Take control of your budget so it allows you to control your money instead of the other way around. You’d be surprised what a liberating feeling that is.

It’s also important to focus on paying off high-interest debts. If you’ve been doubling up on low-interest mortgage payments while paying only the minimum amount on a high-interest credit card, you need to rethink and adjust your payment strategy.

• Consider transferring the balance from a high-interest credit card to a lower-interest card. But always read the fine print and be aware of the fees many credit card companies charge to transfer a balance from one card to another.
• If the interest you’re paying on your debt is greater than the interest you’re earning in your savings account, you should definitely consider paying down your debt as a short-term strategy.
• If you don’t have the savings to pay off your debts, consider getting a low-interest home equity loan.

If you’re behind on some of your bills, be sure to communicate with your creditors. Don’t be afraid to be truthful about your situation, and reassure them of your intent to repay your debt. If you can’t afford to make your regular payments, ask if you can set up a plan with lower payments. You may even be able to negotiate with your creditors to drop finance, collection and others charges if you pay the full amount by a certain date.

Finally, managing your debt is an ongoing process. Once you’ve met your short-term goals, you may want to revise your budget and rethink your payment strategies. Just remember to keep up the good habits and stick to your game plan!