Financial Capability

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Tips on Managing Debt

Category: Financial Capability

Avoiding unnecessary debt should be at the top of your strategies when managing money, taking into account that the meaning of unnecessary will vary from person to person depending on their values and preferences. If buying a new car is more important to you than saving for college, getting a car loan in your mindset will be “good debt” rather than an additional discretionary financial obligation. Managing money and debt should not be viewed as a moral issue, because people tend to avoid feeling “bad” for the decisions they make and therefore procrastinate instead of taking necessary action. Make a list of all your debts, including student and personal loans, credit cards, auto loans, mortgages and store cards. Find out the current interest rate you are paying on them, use a payment calculator to figure out how long it will take to pay them and how much will you save if you pay them more aggressively. Pay your higher interest rate debt first and avoid getting further into debt.

Sample payment chart


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