Debt management may be sound complicated. But simply, it is just organizing and prioritizing all your payables and get rid of it as soon as you can. You may not be able to find your way out with all the bills you need to settle.
To help you out, we have provided a handy guide on how to effectively manage your debt.
List all your debts
The first thing you need to do to start your debt management is to list all your debts, may it be a loan, credit card, or car amortization. Enumerate all of these debts, how much you owe in each one, and who do you owe it. This way, you will see the bigger picture of how much is your total debt. Furthermore, update the list of your debt once there are changes. This will help you see your progress.
Create bills payment calendar
After you listed all your payables, make a payment calendar. Note the due date of each debt. This will enable you to see which bills to pay and with which paycheck. For example, your credit card bills must be paid on the 15th of the month while your car amortization is due before the 30th of the month. Doing this will allow you to manage your money and allot for each debt without comprising your monthly budget.
Pay your bills on time
As much as possible, pay your bills before or on the due date itself. Remember that your payment history plays a big role in building up your credit score. So, it is important to not miss a payment. In case you have missed one, make it a habit to pay it as soon as possible. Most of the credit score companies track if you are 30 or 60 days late of payment.
Make minimum payment
Have a habit to pay a minimum amount every time. If possible, pay more than the minimum required amount. This aids you to pay the debt faster and saves you from getting late payment interest rates.
Take new debt only when needed
It is tempting to get another loan or credit card if it has a low-interest rate or no annual fee charged. However, getting another credit account while you are still paying with your current credit will just leave you too overwhelmed and handling too many accounts can be quite to manage and can negatively affect your credit score. So, if it is not an urgent need, do not apply for a loan or get another credit card.
Have an emergency fund
Apart from building your savings account, it is also recommended to build your emergency fund as well. This fund will serve as your buffer in case of unexpected expenses, such as medical costs or house repair.
Accumulating so much debt will definitely cause you money troubles. The key to tackling such financial challenge is to plan ahead and set a budget so you will have an outline of all your expenses. By setting up your priorities and following these easy steps, you will surely put an end to your financial stress.