When you’re a parent, you may be tempted to think you have the solution to every problem.
That is, you’re an expert at debt management.
But you may also be wondering if it’s worth the trouble.
The experts say you shouldn’t be tempted.
Here’s what they have to say.
Debt management isn’t for everyone.
“It’s a really good idea to start with a good debt-management plan,” says Michael A. Linder, a professor of management at Stanford University.
“But if you can’t get on your feet in two months, you might need to rethink it.
You need to make sure you’re doing something productive and productive-minded.”
You may not need to spend a ton of money to start reducing your debt.
A simple monthly budget will work, says Linder.
“You can put money in, save money, save for a down payment,” he says.
“And you might also want to take a few months off to work out the kinks of your credit score.”
It can take a while to see a significant drop in debt.
For most people, debt-reduction programs usually require a $50,000 down payment.
But with credit card companies offering free credit monitoring, there’s a low risk of having to wait more than a year to see results.
“The credit-card companies will get a lot of people on their books within the first year,” says Linders.
“They’ll have a lot more customers who are actually paying their debts and getting their money out.”
If you don’t manage your debt, it’s going to hurt your credit scores.
“If you’re not managing your debt properly, then your credit is going to take off at a much slower rate,” says Robert R. Johnson, a credit-scoring expert with Credit.com.
“There’s nothing you can do about that, and that’s going by your credit report.
You can’t change it.”
You’re not going to save money.
The best way to manage debt, says Johnson, is to use a credit card.
If the amount you spend is a fraction of what you owe, your credit will get better.
But there’s no point in spending more than you have to to make ends meet.
“When you have debt, there are things you can spend to reduce it, like paying your rent or paying for your car,” he explains.
“That’s fine, but it’s not going, in my opinion, to bring your credit up to par.
If that’s the case, you should just start paying down your debt.”
Your credit score can’t always be trusted.
Credit scores are based on a person’s information.
If your credit reports aren’t reliable, then it’s hard to predict the creditworthiness of others, says Ryan E. Smith, a personal-finance expert with the American Bankers Association.
“Most people have a high credit score because they have a low debt,” says Smith.
“In some cases, people have credit scores that are below the minimums that lenders and credit agencies require.
If someone has a high score, that can be good for them.”
Debt is a drag on your credit.
When you get your first bill, you will be able to see how much money you owe on it.
But if you’re worried about the impact of your debt on your ability to pay your bills, you need to look at your credit history.
“Credit history is one of the most important indicators of a person,” says Miller.
“For most people who don’t have a credit history, their credit score is a bad indicator.”
Credit cards aren’t free.
You’ll probably need to pay interest on your debt to use the cards, says Rolf D. Schoenbaum, a mortgage and consumer finance expert with Moody’s Analytics.
“At some point, you have got to make some adjustments,” he adds.
But even if you don´t want to pay extra for the card, it might still be worth it to put down some cash.
“A lot of credit cards are a way for people to put money aside to save for retirement,” says Schoenbach.
“People can save more on their credit cards than on an annual fee, and the card can help them avoid a lot.
But the best part is that credit cards will pay interest.”
You shouldn’t use credit cards to get a mortgage.
“I think it’s a bad idea,” says D. Michael Smith, an economist and professor at the University of Missouri.
“With credit cards, it is the lender that gets to dictate your monthly payments.
It’s not the consumer who is paying for the loan.
So you are paying a higher interest rate than you would be paying for a conventional mortgage.”
You might not have a home.
Credit card issuers are trying to encourage homeownership, which has been associated with