Debt Management Tips from the US Federal Trade Commission

During this inflationary period, more and more people are relying on credit cards to get by. At the same time, the Fed has been raising interest rates, making borrowing more expensive. If you’re on the cusp of financial trouble, or are already there, you do have remedial options. With that said, here are some debt management tips from the U.S. Federal Trade Commission.

Establish a Budget

There’s that “B” word again, you may be saying. Sorry, but it’s a fact: you can’t get or stay out of debt until you create and stick to a budget. Why? You simply need to know how much you’re spending, and where your cash is going. If you’re hesitating, remember that no one is asking you to live a life of asceticism; be sure to build into your monthly budget room for a reasonable amount of fun and “wants,” as opposed to “needs.” But it’s crucial that you get a hold of your spending and develop better habits.

Come Clean with Creditors

It’s a good idea to contact the people you owe and explain that you’re going through some financial troubles. Ask if they’ll lower your rate or change your payment schedule. Hey, there’s no harm in inquiring. In fact, many creditors would rather accommodate you, at least temporarily, so that they can get something, as opposed to a possible goose egg. And yes, you must do this before your account goes into collections. By then, it’s too late.

Know Your Rights Regarding Collectors

While you may be in financial trouble, you don’t have to accept just any kind of conduct from those pesky debt collectors. In fact, you have federal law to protect you. The Fair Debt Collection Practices Act puts restrictions on what such collectors can do to get you to pay up. For example, you may not be contacted about your balance before 8 a.m. or after 9 p.m. Also, calls to your workplace are prohibited if you tell the collector not to make them.

Manage Your Secured Debt

This is debt that is tied to an asset such as your house or vehicle. If you don’t make your payments, your lender can foreclose on your home or repossess your car. If you find yourself behind on your mortgage, contact the bank without delay. If your situation is temporary, most lenders will work with you if they’re convinced that you’re acting in good faith. Regarding your vehicle, if default appears nigh, you may want to sell the car then pay off your debt. This way, you can skirt notation on your credit report.

Use Debt Settlement

If you’re overwhelmed by debt woes, you may want to consider a financial strategy called debt settlement. Here, you’ll hire an experienced, accredited agency such as Freedom Debt Relief to negotiate with your creditors to get them to accept less than what you owe, in a one-time payment in full, to have your debt marked as “settled.” Creditors – usually credit card issuers – usually go along because they realize that if you file bankruptcy they may wind up with nada. Learn more about government debt relief programs.

Consider Credit Counseling

If your issues are not as severe, and you want to keep them from becoming such, you may want to mull credit counseling. These are accredited financial counselors who can advise you on how best to manage your money and debts. They also can help you put together a budget and will offer resources such as free educational workshops and other financial literacy materials. These services are usually free although some agencies charge a nominal fee. 

If you take these debt management tips from the U.S. Federal Trade Commission to heart, you’ll get back on financial track – and stay there. The key is to get in front of your situation without delay.