4 Actionable Ways to Manage Debt Responsibly
‘Being in debt isn’t so bad’. This statement has controversial written all over it.
Financial websites and magazines are full of journalism about individuals who drowned in debt. Debt is often purported as a gruesome state to be in, almost similar to an incurable disease.
But here’s the kicker: debt is an integral part of today’s’ global economy. People borrow money all the time, using it for their education and to invest in businesses. Of course, debt is risky. So is a smartphone, but it doesn’t mean you stop using it. The key is having control over them.
And that is achievable with a solid debt management plan. Here are 4 actionable ways to get your balances down and minimize the debt you pile on in the future.
Create a Budget
Regardless of the amount of debt you have stockpiled, creating a smart budget is a viable way to keep your finances in check.
It helps you balance your earnings against your expenses and gives you an idea whether or not you’ll have enough money to pay your bills in the upcoming months.
In addition, budgeting will usually disclose wasteful spending patterns that will reveal the best areas to cut back on expenditure. As a result, you’ll free up more money to put towards debt payments.
Build a Hassle-Free Emergency Fund
Without savings, people often go into debt to cover an emergency expense. This could be easily avoided with options like payday loans.
However, payday loans have to be paid back in full on the next payday, making it difficult to create a sustainable emergency fund.
The other option is an alternative payday loan known as an instalment loan. Unlike payday loans, an instalment loan has to be paid in instalments.
Top instalment loan providers can verify your loan application over the phone, and deposit the amount in your bank as soon as the following business day.
Prioritise Paying Off Certain Debts
Credit card debt tops the list when it comes to repayment priorities. The credit card with the highest interest rate should get the first priority as it costs the most money.
Try to clear more than the monthly minimum (if you can afford to) for the high-interest debts, while routinely clearing the monthly minimum on lower-interest debts.
Annualcreditreport.com can provide you with a copy of your credit report free of charge. Get one to track the credit-card accounts and loans that you have outstanding, and then rank your debts in the order you want.
The list will also help you decide where to put extra cash in order to minimise your debt.
Consolidating Your Debt Isn’t a Bad Idea
If you’re faced with different debts that are in different locations, it can be challenging to keep track of the monthly payments you need to make.
Therefore, keeping tabs on your budget and saving money is made all the more difficult. Consolidating all debts in a single location can help you get a grip on your financial position, and allow you to accurately plan payments for the months ahead.
With one payment to reduce the entire debt, you can effectively budget the due amount, as well as your actual savings progress.
Indeed, getting out of debt is a mountain to climb, but with the right measures you can pave your path for financial stability.
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