If you don’t use it appropriately, your credit card may cause a lot of problems for you in the future. So, how do you avoid credit card trouble? Simple! By spending only what you can afford to pay back promptly. Many people in the United States cannot afford to pay for a house or a vehicle. So, to buy a house a vehicle or house, these people borrow money from a bank or other lender. While debt isn’t necessarily a bad thing, it is recommended that you manage your debt wisely to avoid any future financial problems.

Before you start managing your debt, you must find out how much debt you have. How can do that? Following is an equation that shows your debt to income ratio:

Debt to income ratio= Monthly fixed loan repayment

Gross monthly income

By using the aforementioned equation, you can find out whether or not you have too much debt. In case you have significant debt, you must find out the best ways to manage it. Following are some debt management ways that credit counselors recommend.


Are you concerned about your long-term financial health? If yes then the first thing that you need to do is create a budget. When creating a budget, the first thing that you need to do is create two lists: income and expenses. Once you’ve done that, minus your total expenses from your total income. On the other hand, you have nothing to worry about if you get a positive number because number indicates that you’re living below your means. If you get a negative number then it is a clear sign that you need to mend you ways. Basically, a negative number denotes that you’re living beyond your means. Now, there are two ways of dealing with this situation: decrease spending or increase income.

Develop a debt management plan

Using credit wisely is the only way to achieve good financial health. Also, you’ll need a debt management plan if you want to minimize your debt. To develop a debt management plan, the first thing that you need to do is list all of your debts. Starting from the smallest, rank your debts according to their size. Once you’ve listed down your debts, you need to work out how you’ll pay off each debt. Once again, start with the smallest debt.

Many people would advise you to pay the debts with higher interests first. However, a considerable amount of time is required to pay off these debts. So, if you start with these debts, you’re likely to get ‘stuck’. On the other hand, if you start with the smallest debts, you score some early ‘wins’ which will give you the confidence required to deal with and pay off the larger-sized debts.


Debt can cause a lot of future problems if isn’t dealt with appropriately. By using the aforementioned ways and talking to credit counselors, you can ensure that debt is not a problem for you in the future.