Debt! financial Poison or Fertilizer ?
What to do if you're in debt, and you're not sure how to manage it. No matter what level of debt you are currently in here are a few simple yet effective tips to help get some control.
1.Relax
When the time comes and you realize that things may be getting out of control. STOP. This is the most important advice you will ever receive. before you rush out and dig yourself a bigger hole. STOP. slow down and relax.
Relaxed?2. List Your Debt
Most people unknowingly Spend way beyond their means and the first signs that debt could be becoming an issue may be very mild
Now is the time to list each debt in our "Debt Portfolio". When listing our Debts be sure to list:
1. The Debt title
2. The amount owing
3. The current interest rate
4. All Fees associated with this
account
Most of this information can be found on your original Credit agreement documents, or in some cases, you may have to contact your financial institution.
3.
Prioritize
See
which of your debts are attracting the highest interest rates and
target them. They are the biggest strain on you, so the sooner that you
pay them off, the closer you will be to getting some debt relief. Pay
the minimum on all of your other debts, except for the debt at the top
of your list and pay as much on that one as you possibly can.
4. Consolidation
Debt
consolidation entails taking out one loan to pay off many others. This
is often done to secure a lower interest rate, secure a fixed interest
rate or for the convenience of servicing only one loan
Debt consolidation is often advisable in theory when someone is paying off Credit Cards. Credit Cards can carry a much higher interest rate than even an loan from a bank. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral.Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest.
Be warned, consolidating everything, doesn't always give you the best deal. For instance, consolidating your personal debt into your home loan may look attractive at first, but think about this. Although the interest rate is lower, it doesn't mean that the amount of interest you pay will be lower. The length of the loan has a huge impact on just how much interest you will pay.
5. Debt Control
Without a Budget
To put it quite simply, Debt control without a budget WILL NOT WORK! Our debt repayment amount is set out in our budget and without it we will quickly drop down to minimum payments or no payments at all.
6. Pay More Then the Minimum Repayment
It's not enough to just pay the minimum. repayment. This is particularly the case with credit cards, as these repayments will only cover the interest and you will never pay the debt off.
7. Keep On Track
Creating a plan is only the beginning. this debt reduction plan must be constantly watched and any possible relapses must be stamped out quickly.
If you have reached this point in this guide and things seem too hopeless GET HELP! Every day that you ignore this problem is a day closer to financial ruin, or a day further away from financial freedom.
Hope We could help!"Money
can't buy you happiness but it does bring you a more pleasant form of
misery."
Spike Milligan.