The best rule of thumb for managing debt is an easy one: Don’t spend more than you earn. It sounds simple. But considering the multitude of options out there — from low-interest credit cards to personal loans — it's also possible to lose track of how much you owe and to whom. It can be easy to lose sight of your financial well-being without even realizing it.
How do you stop debt from rolling out of control? The most sound form of prevention is to stop these issues before they start.
For example, before applying for a credit card, read the fine print. Is that low interest rate ongoing, or will it increase dramatically in a few months?
When you're pre-approved for a loan, weigh the monthly payments versus your other expenses. Can you safely afford that new cost each month?
Even if your debt situation isn't as clear as you'd like, you usually can place yourself in a better position.
The first step: Diagnose your debt dilemma. Have you formed some bad habits with your credit, such as opening too many credit cards or consistently making minimum payments?
If so, one option to consider is debt consolidation, which can lower your overall interest payments and merge your multiple payments into a more-manageable plan.
By understanding how these tools can work for you, you may be on your way to mastering debt and securing your future.