Setting Goals

Debt management may be something you’ve thought about. Using debt as part of an overall financial strategy can be a great strategy. However, debt can become a bad thing when you have too much of it, have the wrong kinds or when its presence causes undue anxiety or bad behavior. Here are some ideas to help you make sure you are controlling your debt, and not the other way around.

Set priorities for using debt. Borrow money for things that provide long term and lasting value. Borrowing for college costs is probably good while charging another extravagant vacation on your credit card is probably not.

Use the best type of borrowing. Whether it is choosing a credit card or a home mortgage, be sure the terms of your borrowing match your goals and how you manage your finances. If you pay every credit card bill in full and don't incur any finance charges, it may be OK to have a card that has a high interest rate but offers rewards for use (like miles or money back) or has an annual fee. If you carry over balances and pay finance charges, the interest rate becomes more important.

If considering a mortgage, first identify the type that matches you behavior. If you plan to sell your house soon, you may want an Adjustable Rate Mortgage (ARM) with a lower interest rate. If you plan to stay in the home or can't afford any increase in payments if interest rates rise, consider a long term fixed rate mortgage.

Eliminate high cost borrowing. Determine if you can convert high interest rate debt to another type with lower rates. If you are paying interest on credit card balances, find a card with a lower rate, but watch out for "teaser" rates. If you have equity in your home, consider a home equity loan to consolidate all your debts at a lower rate.

Pay down your debt. Incurring interest charges you can't afford or you don't want is not a good use of your money. Find ways to pay down what you owe even if it takes discipline and sacrifice. Pay more than the minimum due on credit cards. Don't buy that piece of clothing you really don't need or take a fancy trip when a visit with family would be just as enjoyable.

What if you can't pay your bills? This is when you should get help. First, stop incurring more debt - quit using or destroy your credit cards. Then, contact your creditors to work out a payment schedule. Explain your situation and that you want to pay what you owe. They may be able to help. If not, at least you have tried.

Don't bounce checks. In some states, it is a worse offense to write a bad check than it is to not pay your debt. In addition, you may be charged for the bad check. It looks very bad to a creditor if your check bounces.

First Tech offers members with or without budgeting problems the chance to learn how to set and stick to a budget. Just call the Budgeting & Financial Goal Setting professionals, download the budgeting worksheet and you'll be on your way.

To set up your appointment, call 800.637.0852 x4681 or use the online form.