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Managing Your
Debt Checklist
The sensible use of
borrowing should be part of a sound financial strategy. Debt can enable
you to enjoy things that are otherwise beyond your current financial reach.
But, debt can also have an ugly side. Too much, too expensive or the wrong
kinds of debt can make life miserable. Here are four common sense borrowing
habits:
- Never borrow what
you can't repay.
- Never borrow for
a luxury if you can't afford the necessities.
- Prioritize your
borrowing.
- Reserve some borrowing
capacity for emergencies.
You may want to print
this page (or click here to download the
pdf file) to record your information.
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Item
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Actions
needed
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Review you
credit report.
A solid and
accurate credit record can make borrowing easier and cheaper.
You can get
a free report annually at www.annualcreditreport.com or you can
order one.
Equifax - 800/997-2493
Experian - 888/397-3742
TransUnion - 800/888-4213
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Examine your
home mortgage.
Would refinancing
reduce your monthly payments because of lower rates?
Consider paying
down your mortgage faster than the regular amortization.
Examine whether
you have the right type of mortgage. A shorter term or adjustable
rate mortgage may better match your plans and offer a lower rate.
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Consider
a home equity loan.
Using the proceeds
of a home equity loan to pay off credit card debt will probably
reduce your interest costs. Interest paid on a home equity loan
may result in a tax deduction unlike other types of interest.
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Evaluate
your credit cards.
Are you using
them wisely and paying off the balances monthly?
Does the combination
of fees, rates and "reward" benefits match how you use the card
and provide the lowest total costs?
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Auto loans.
If borrowing
for the purchase of a car, be sure to compare the loan rates from
your financial institution with those offered by the auto dealer.
A rebate from the dealer, instead of their "low" rates may be better.
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Electronic
payments.
Using regularly
scheduled electronic payments from your checking account to pay
your mortgage, auto loan or credit card bill can simplify your monthly
bill paying and ensure payments are received in time to avoid any
late payment charges.
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Getting help.
If your borrowing
is causing you anguish, take steps to control your borrowing.
Quit using credit
cards, substitute a debit card for your credit card, develop a plan
to pay off your debt and definitely pay more than the monthly minimum
on your credit card balances.
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