Debt has currently become part of our today’s society life. We mostly take debt to pay for our education, own a home, buy a car, and to expand our businesses. If the debt is well managed, it can help us to achieve most of our desires. What happens when it is mismanaged? Instead of helping us to move forward, it hinders us from achieving our aspirations. Would you rather have a debt helping you achieve your lifetime goals or one which hinders your progress? Here, we have discussed the seven best strategies that you can use to manage your debt successfully. Scroll down to learn more.
1. Have a List Showing all your Debt
Many people forget that they were having some debts until debt collectors catch up with them. The best thing is to have a list showing all your debts with almost due debt topping the list. You should indicate the creditor’s name, the amount owed, the date of the issue, and the due date. In so doing, you will always be aware of all the debts that you owe to several creditors, and you wouldn’t miss their payments. You should regularly check your list and update it on monthly dates to capture the cleared loans or any additional loan. Is this enough to manage my debt? No! Well, you should develop an efficient and straightforward debt repayment strategy. If your debt is up the radar, you should consider reducing the credit cards that you own.
2. Don’t Postpone the Payment of your Bills
Have you been late with the payment of bills before? If yes, you will agree that it posed what can be said to be a double tragedy. I mean, you have to pay two bills at the same time due to the postponed one while at the same time you have to pay the incurred interest rate of the postponed debt. This can make you miss two or more debt payments dates in a row doubling the interest rate.
So, how do I ensure that I don’t miss the payment date of any bill? It is simple! You either use a computer or a smartphone. If you set a due date in your computer calendaring system, you will get a notification several days before the due date reminding you that you have a debt to repay. Perhaps you miss a payment, send it as soon as you remember. If you wait until the next due date, you can be fined or blacklisted by the credit bureau.
3. Know your Monthly Spending
One way to ensure that you are not overwhelmed by debt is to cut on unnecessary monthly spending. Fast track you’re spending to know the areas where you spend most money and to see whether you can improve. This can help you to know that you are over budgeting. If this is the case, mitigate some measures to cut on unnecessary spending. By doing so, you will reduce the instances where you have to take extra debt to finance unnecessary expenditures. You will, therefore, be dealing with the debt that helps you to improve your life. However, make sure that you account for extra payments when budgeting.
4. Ask for Help if you Struggle Paying Debt
Sometimes, you may not have money to pay the debt on time. If this happens, contact your creditor immediately before the due date to know the options available for you. Most of the lenders have a negotiation payment plan for their customers if the debt becomes unbearable. After your lender offers you a modified payment plan, put the details in writing. Also, there are debt relief companies that help you if you are struggling to pay your debt. However, make sure that you don’t fall for scams as some of them are scams. Check any company promising help with the Better Business Bureau to ensure that it is legit.
5. Determine the Loans to Pay first
It would help if you had the priorities of the loan types that you intend first to pay. Some debts like credit card debts attract higher interest rates than other loans; therefore, it is wise first to clear them. If one credit card loan as a higher interest rate than the other, pay the one with a higher interest rate first. Also, list your debt in the order in which you intend to repay them. If your money is not enough to cover for the most prioritized debt, first pay the one with the lost balance. This helps in avoiding confusion.
6. Always have an Emergency Fund
An emergency fund is vital as it can help you to repay some of the debt even when you don’t have access to your savings. You can start by having a small emergency fund of about $ 1500. You can then consider increasing it at the same rate in which your debt grows. Eventually, you will have a huge emergency fund to cover almost every debt that you might not be able to repay. What can I do if I don’t have an emergency fund? You then have to put unexpected expenses on the credit card. Therefore, the only option is to have an emergency fund.
7. Make at least Minimum Payment Every month
You may find yourself with only two options every month. Either you fail to pay the debt, or you make just a minimum payment. Instead of not paying at all, it is essential to make minimum payment s it raises your credit score and lowers your debt. If your account remains good, you will be able to easily access loans from other lenders when you have an emergency.
Managing debts is not an easy adventure, and it has its own drawbacks and challenges. Even so, it is vital to ensure that you pay the debt to attain a stable financial future. While there are challenges, the above tips can help you to manage your debt successfully. Start implementing them today, and soon, you will see changes in your debt management.