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With the state of our world at the moment and our ever-fluctuating economy, the future seems so bleak that even getting out of debt looks as though it will be more excruciatingly difficult as the years pass by. 

While living a life free of debt sounds like a faraway dream, it doesn’t mean it isn’t possible. Financial freedom can still be achieved — it all boils down to how you manage debt. 

So many things in our everyday lives overwhelm us already and debt shouldn’t be one of them. 

Here are some debt management tips you can utilize as you make your way to financial freedom: 

Know What You Owe 

Keeping a list is a piece of advice you will often hear when it comes to things like personal finance and budgeting—and that’s for good reason. While it’s unpleasant to face the music, making a list of how much you owe and to which providers, as well as details such as monthly payments, interest rates, and due dates, allows you to see the bigger picture and stay aware of where you’re at. 

If you have the means to do so, you can even get a debt reduction software that can make this process effortless. 

One thing about lists that people forget, though, is their existence. Once you’ve enumerated everything in a document or a spreadsheet, make sure to refer to it periodically, especially when you pay your bills. Keep your list up to date every few months as your total amount of debt changes. 

Part of reducing and managing your debt is also limiting the debt you add on. A constantly updated list will give you an idea of what you can reduce or totally eliminate. You may have to make tough decisions, but maybe it’s about time to stop spending too much on those non-essentials. 

Identify What You’re Earning and Spending 

Aside from knowing what your debts are, understanding how much money you’ve got coming in, the budget you have for your daily essentials, and where the rest of your cash goes can help identify where there may be room for movement. You can use a bit of this extra to add to your repayments. 

You can also create a monthly bill payment calendar to help you in determining which bills to pay with which paycheck. Simply write each bill’s payment amount next to the due date and fill in the date of each paycheck. 

You’ve heard this said time and time again, but let us reiterate: pay your debts on time each month. Avoid late fees and added interest charges as much as possible. Create alerts several days before your payment is due or, if possible, use automatic payments. This will keep your credit card rating from getting even worse over time. 

Determine Which of Your Debts You’ll Pay Off First 

Most people obsess over the wrong debt. When it comes to strategizing debt payments, one of the first things you should consider is paying off your credit card debt as these typically have higher rates. This is in comparison to other debts such as student loan debt that usually have single-digit interest rates. 

If you have multiple credit cards, prioritize those with the highest interest rates as this will cost the most. Use the debt list you created earlier to rank your debts in the order you want to pay them off. 

An alternative to this is to pay off your debts with the lowest balance first. Take note that this will cost a little more in the long run, but crossing out those small debts from your list can help in building confidence. 

Always Have a Back-Up Plan

There are just some expenses that you don’t anticipate and that’s why we’re repeatedly told to expect the unexpected. Sudden changes in the status of your health and employment can prevent you from working on or making repayments. 

Without access to savings, you’d also be forced into debt to cover emergency expenses. This is why having an emergency fund can potentially help you avoid missing repayments or adding more debt on top of what you already have. 

When it comes to emergency funds, you don’t have to go big straight away—$1,000 is already a good place to start. You can then work on building it strategically. What you want to end up with eventually is a reserve of three- to six-months worth of living expenses. 

Don’t Doubt Reaching Out 

The road to financial freedom isn’t one that you build on your own. It’s okay to ask for help when you find it too hard to pay your bills month after month. A credit counselor can be your guide as they will help you with the knowledge and wisdom they’ve gained over the years. 

They can also keep you accountable and motivated so that you’re on the right track with your repayment plans, as well as provide you with much-needed support when you meet with your creditors.