Managing Debt

Knowing your numbers is your advantage and your power! If you feel overwhelmed with finances and have debt, you are not alone. Getting out of debt can be done, below are a couple steps to guide you through the process.

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KNOW YOUR NUMBERS -

When looking at your numbers, make sure you can measure them. This can be as simple as using percentages. Looking at percentages is useful when handling debt. In this case divide your total monthly debt by your monthly gross income. This percentage (debt-to-income ratio) is recommended to be below 36%.

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HAVE AN ACTION PLAN -

Before making a payment plan, start by identifying the interest you are paying on your debt. If you have multiple loans, credit cards or lines of credit make sure you identify the terms. Order your debt from smallest to largest and pay off the smallest debt first.

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MAKE A BUDGET -

There is no way to effectively pay off debt if you don’t know how much money is coming in and how much money is going out. Having a budget is crucial and it is the base of any successful business.

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The most important thing is to start where you are and make progress, even if the steps feel small, the fact that you are looking at your finances and making a plan is a big step.