Here’s one key to effective debt management

For many Connecticut residents, paying down debt is a high priority. But knowing how to get started on that task can feel overwhelming. There are multiple ways to effectively pay down debt, but all require that the consumer begins from the same place. In order to succeed at debt management, it’s necessary to understand the full scope of what you owe. 

Taking stock of current debt can be a challenge. That’s especially true if the debt was accrued over the course of many years or if the individual has numerous creditors. But it’s important to figure out exactly what is owed, and to whom.

Begin by gathering current account statements, some of which may be available online. Don’t forget about older debts that no longer have active statements coming in. It’s also important to include all types of debt, including student loans, auto loans and credit card debt. 

According to finance experts, most people carry about 40 percent more debt than they think. So consumers shouldn’t be surprised if the final tally is more than they thought possible. Once all accounts have been listed, note the interest rate on each debt, as well as the age. 

If there are older debts that are nearing the credit reporting cut-off date, it may make sense to let those ride for a while. Otherwise, a great way to begin paying down unsecured debt is by tackling the accounts with the highest interest rates first. Some people prefer to pay off accounts with small balances first, which is also a valid approach. 

Once a Connecticut consumer has the full range of debts clearly listed, it’s easier to create a plan of action. Be sure to prioritize more expensive debts and pay close attention to the timing of accounts. For questions or concerns about the rules on collecting older debts or other debt management issues, contact a personal bankruptcy attorney for clarification. 

Source: madison.com, “3 Steps to Paying Off Debt“, Chris Neiger, Jan. 25, 2018