Personal finance is not limited to your income and fixed and variable household expenses only. It also includes your debt or debts that you also need to pay every month making it a viable item to be included in your expenses list. Therefore, just as any other expense you will also have to consider it seriously and find ways to pay it regularly and diligently.
There is a difference between debts and other monthly expenses which ideally may seem to be a significant problem and point of bother as well. It is that most monthly expenses apart from the utility bills will not have any amount accrued and added every month if you fail to pay. The rate of interest that all debts carry gets added every month you fail to pay and this interest, you will be surprised to know, is calculated at a compounded rate of interest and on a day to day basis.
This is a very complex calculation but the simplest thing to say about it is that this accrued interest will make your life, financial health as well as your affordability to repay the loan as complex as the method of calculation.
Simple steps to follow
A few simple steps followed will help you to reach safely ashore wading through the turbulent waters of the debt. Well, as support you can always fall back on expert tips and advice from an experienced debt advisor but there are ways in which you can deal with your debts, reduce it by a considerable margin and even stay away from it in the future.
- First of all, you must be brave and honest enough to accept and face the fact that you are in debt. Most people do not accept it that it is only them to be blamed to find them in such a tricky situation in the first place. As a result, they avoid debt calls and mails which does more harm than good to the already sensitive situation wherein personal finance seems to be crumbling and its health deteriorating fast. You want to make sure you get your affairs in order so you can manage your debt.
- Also, accept the fact that if the ignored debt can have serious consequences in your credit report reflecting your defaults on it. This will even make your future life more uncomfortable having no sources left for a loan when you may need it the most.
- Next up, you must believe in yourself and your ability and never have a doubt whether or not you will be ever able to lead a debt-free life. With strategic steps followed to manage your personal finance, you can pay off each and every debt that you may carry and not affect your credit score negatively in the process.
- You must also know that debt settlement, filing for bankruptcy, looking for debt relief offers and programs and consolidating debts is not the one and only way to get rid of your debt always. Therefore, before you check Nationaldebtrelief.com ratings consider other alternatives and available options to deal with your debt and pay it off.
- Start with making a proper budget for your finance and look at it often, preferably every day. This will show you the ability to spend according to your income and prevent overspending. You will cut your coat according to the cloth available and not have to take on any debt in any form. There are several budget tools that are available on the internet to help you out in this matter.
- Always have a plan early on. This will enable you to have enough money in hand to fund your needs. This fund may also help you in raising the required money that you need to deposit to the lender or availing any secured loan in particular.
Now, assuming that even after making all these diligent and honest efforts you still have to take on a loan, you should not lose confidence in you in such situations either. There are ways in which you can prevent these debts reaching to an uncontrollable limit making your life, personal as well as financial, difficult. The useful and effective steps to follow include:
- Starting paying off immediately: Since you will know about the money you have in hand from your budget you will not find it very difficult to start paying off your debts as soon as they occur. Depending on the type of debt and the rate of interest it carries, you must decide which to pay off in full. It is best to start paying off the debts that carry higher rates of interest such as credit card debts.
- Not ignoring others: Make no excuse to ignore the other debts that you may carry as that will keep on adding interest and charges and add to your woes. Try to make the minimum payment due for all these loans. This will save you from the penal charges for non-payment. Make sure that you never pay less than the minimum monthly amount due as that will not serve any of your purposes. Even better if you can pay more than the minimum amount due as that will reduce the outstanding balance and clear your debt fast.
- Transfer of balance: You can consider balance transfer or consolidation of loan for this matter into a larger amount of loan which is provided at a lower rate of interest for a longer period of time. This will enable you to reduce the number as well as the number of monthly dues making it simpler for you to repay the single debt to a single creditor.
However, know about the features and pros and cons of each beforehand.
To prevent you from experiencing such a situation where you will not be able to repay your debt easily it is paramount that you manage your debt as well as your personal finance well and maintain a proper balance between your income and expenses. This will ensure that you create a good enough corpus of money to pay off your monthly bills of utility or debt comfortably, confidently and on time to prevent the accumulation of debt.
Newly middle-aged wife of 1, Mom of 3, Grandma of 2. A professional blogger who has lived in 3 places since losing her home to a house fire in October 2018 with her husband. Becky appreciates being self-employed which has allowed her to work from 'anywhere'. Life is better when you can laugh. As you can tell by her Facebook page where she keeps the humor memes going daily. Becky looks forward to the upcoming new year. It will be fun to see what 2020 holds.