debts

Debt Management Tips that will keep you Debt Free

In our society, debt is considered part of our regular life. Debt enables us to own property, get an education, start and expand our businesses, among others. If you handle debts correctly, you can get the impossible accomplished and improve your life. However, if you mismanage debts, it can hinder your progress leading to stagnation. This article will offer insights on debt management.

Understand Your Debts

debts

The first step in debt management is to know how much debt you have, who to pay, and when. Make a comprehensive list indicating the amount of debt, the creditor, amount to repay, and the due date. This list will assist you to come up with effective ways of repaying and managing your debts.

Every time you get the money, you should go back to your list and determine which debts to repay. As the debt figure changes, you need to update the list periodically; let say, for example after every month.

Prioritize Debts

Develop a list of all your debts and know which debt to pay first. For example, if you’ve credit card debts, they should be paid first since they attract huge interest rates. Other debts that draw insignificant interest rates can wait. Only consider high-interest debts as a priority. You debt management list should be in an ordered list starting with the debt attracting the highest interest rate to the lowest.

Pay Debts Regularly

You can remarkably reduce the amount of interest paid on each debt if you adopt a policy of paying the minimum payment before the due date. If you have difficulties adhering to the deadlines, opt for an autopay option. Always avoid the temptation of ignoring your debts. Small regular payments can work wonders in reducing your debt burden in the long term.

Avoid Impulsive Spending

impulse buying

If you have a weakness in impulse buying, first identify what triggers you into this habit and develop ways of countering the trigger. Impulsive buying is one way of increasing your debt burden. In your monthly budget, allocate some money to luxuries but avoid exceeding your set budget for indulgences.

If you are in debt, it’s possible to live in a debt-free future, but this will depend on the debt management strategies your implement. You must also must differential “good” from “bad” debt and try by all means to avoid bad debt. Only engage in borrowing that makes sense and make sure you spend the borrowed money for the intended purpose.

bankruptcy

Practical Ways to Avoid Bankruptcy

If you are at the verge of bankruptcy, you can save the situation by adopting measures to prevent you from landing into this mess. Even the best bankruptcy attorneys will inform you that this should come as the last resort after you have implemented all prevention strategies and they have failed. The following tips can assist you to avoid bankruptcy.

Liquidate Assets

selling your assets

You can avoid bankruptcy by selling items that you may not need in your home. Look for TVs, DVDs, furniture, clothes, boats, books, toys, that you may not be using in your home, and convert these assets into cash. If you have several cars, you can consider selling one or two to offset your debts.

 

Seeking Help from Experts

When you find you’re unable to service your debts, it’s the high time to seek the advice of a financial counselor. The expert will help you come up with practical ways of managing your debts. They’ll assist you in working on ways of preventing excessive spending and saving money that you can use to pay your debts. When you find yourself overwhelmed by debts, search for a reputable financial counselor in your locality and schedule an appointment.

Consider a Second Job

An additional source of income can assist in raising money to clear your debts. If you have one job, look for a second one, if you have two, seek for a third one. You must be ready to make sacrifices to get yourself out of debt. This will only be a temporary measure; once you’ve stabilized, you can revert to your ordinary working schedule.

Make Sacrifices

Look for a way to cut down your spending. At this point, you must clearly define your needs and luxuries. You may have limit your budget for certain items for as a temporary measure. Can you cancel going for movies, foreign trips/holidays? Can you cancel your gym membership? Ensure you’re spending less money than you earn. Learn on how to save on electricity, gas, cell phone and cable bills.

negotiating for a mortgage

You can also opt to renegotiate your mortgage or car repayment. After evaluating your monthly bills, you’ll find you can save a meaningful amount of money that you can use to pay your debts. Consider preparing meals at home rather than dining out. Vacations should also be suspended until you get out of debt; brew coffee at your home instead of visiting the coffee shop. These small adjustments will pay off handsomely by freeing money that can be used to service your debts.

Bankruptcy is a state that no one wants to find themselves in; the ways mentioned above can help you to prevent filing for bankruptcy. Implement all possible methods to avoid bankruptcy.