Useful tips to manage debt
Were you stung by the ever-increasing inflation, rising taxes, mounting bills, and debt payments? Well, you will have to learn to live with the first three, but the last problem can be tackled with comparative ease. Here are few tremendously helpful tips to manage debt!
- Few ways to rein in debt:
- 1. Get a clear-cut idea of how much do you owe to all of your creditors. Having a detailed list will be great.
- 2. Make it a point to pay the monthly EMIs on time, pay at least the minimum amount to prevent debt from surging.
- 3. Prioritize your debts, preferably based on the interest rate.
- 4. Have a monthly budget and an emergency bail-out fund.
Start by knowing how much you owe
The first step in managing debt is to be aware of exactly how much you owe in the first place. Enlist all your debts, the total amount due, creditors, monthly EMIs, due date, and everything else that’s relevant. Your credit report will prove to help chalk out the requisite information.
Compile a detailed list of your own and have it in black and white. It’s best to update it every month as and when you make payments.
Make payments on time.
Save yourself agony by making debt payments on time every month. Failing to do so will only attract a late fee and add to your woes. If you miss a couple of payments, be ready for enhanced financial charges and interest rates.
Having a bill payment calendar on your computer, laptop or smartphone will help in keeping things straight. Set a reminder so that you do not miss out on any one of the payments. If you still end up doing that, make the due payment at the earliest possible to avert the miss getting reported to the credit bureau.
Prioritize debts based on the interest rate. Credit card debts tend to have the highest interest rate, so they need to be at the top of the list. If required, talk to your creditors while planning out a schedule.
Keep an emergency fund.
Things can sometimes turn real nasty, so having an emergency fund is an absolute must. Begin with a small sum; anything substantial will do. Build upon it as time progresses. In addition, have a monthly budget and list every expense in it, however small it may be. This will help you maintain a tight leash on your debts.
Remember, a small step is all that you need at times. Do not despair and hope for the best. Things will start moving in the right direction for sure.