5 tips to manage debt wisely11 February, 2017
Whether it is a personal loan, credit card dues or any kind of debt, it is costing you money! And thinking about it keeps you up all night. Now is the right time to take action and steer clear of the debt trap.
Tip #1: Evaluate your spending
Many of us have the habit of stashing away our bills of purchases or credit/debit card statements without reviewing them carefully. Well, the key to manage your debts is to know where are you spending.
Take out your bills, evaluate your spending pattern and make necessary adjustments for the future. Try to maintain an emergency fund in case some unexpected expenses pop up.
Tip #2: Good Debt vs Bad Debt
In general good debt is that which helps you increase your net worth and helps you generate market value. one notable example of good debt includes education loans. Income earning power is directly proportional to education a person get. That is more the person spend on his college and technical education , the more likely is his potential to earn.
Now, in contrast to good debt, bad debt is what doesn’t increase your net worth and purchasing it would not generate any market value. Even a good debt can become a bad one if you do not forecast the risks involved and your ability to payback the amount.
Tip #3: Get a Debt Consolidation Loan
A lot of people use debt consolidation loans to go debt-free. Some may argue that this, in fact, creates more debts in the future, but if done correctly, it can be found useful. Interest rate for a debt consolidation loan at Monexo can be as low as 13% p.a.
Tip #4: Tip #4: Avoid buying new assets
When trapped in a debt trouble, try to refrain yourself from adding on more loans or investment, till you come out of the previous debts. The new purchase will push off the repayment track that you started for your initial loans or investments. Think of it for a moment, how you will feel after paying off your old debts. This will give you lot of positive energy and reduce unwanted stress.
Tip #5: Switch your debts to cards with a lower interest rate
This is not the most effective way of going debt-free, but it certainly gives you more time to do so! Indeed, it is impossible to find a card with 0% interest rate, but by just switching to a card with a lower interest rate certainly does the trick. For this tip, the key thing to pay attention to is saving money and not building up your debts.
The financial decisions that you take today have a long term impact on your financial future.