Managing a household means being able to juggle several different types of debt at once. Mortgages, student loans, credit cards and other types of unsecured loans represent various types of debt a homeowner must deal with from month to month. Finding ways to manage the family budget can help meet all of the household obligations and still have funds left over.
Create a budget.
Knowing what is owed can help establish a budget that accounts for each bill as well as the amount of money coming into the home. Students who have to pay off school loans live on budgets throughout their college years. Using a budget after they graduate will help them pay off their educational loans and build good credit.
Consolidate credit cards.
Consolidating credit cards with high interest rates and transferring the debt to one card that has a substantially lower rate allows for one monthly payment. This reduces the number of payments being made and also lowers the amount of money being spent on interest. Once the credit cards are paid off, get rid of them. Keep one card to be used only for emergencies.
Space due dates throughout the month.
Space due dates evenly throughout the month. This allows a portion of all debts to be paid from each paycheck. No more worrying about having large payouts at the beginning of the month.
Pay more than the minimum payment whenever possible.
During months when extra money is available, pay more than the minimum monthly payment. The extra money comes off the principal and will reduce the amount paid in interest as well.
Give cash or use prepaid cards.
Instead of purchasing items on credit, use prepaid cards. This allows for purchases without creating new lines of credit and increasing a person’s existing debt. Paying cash for items can be a deterrent especially if it is an impulse purchase. Prepaid cards are an excellent way to save up for an item. If the money is needed for another bill, it’s available. If it isn’t needed, it can be saved on the card so an item can be purchased outright instead of buying it on credit.
Explore cash advance options during emergencies.
In case of an emergency, a cash advance or payday loan can cover unexpected expenses. They are easier to obtain than other types of credit or a bank loan and are paid off much sooner. They can also be renewed, if the need be.
Managing the different types of debt incurred by a household is challenging. Understanding each type of debt and how it must be handled will help keep the family finances under control and credit scores high.