Any person can get into a debt sinkhole, even the most responsible ones. Most of us don’t give debt the attention it deserves. We only deal with it at the end of the month when the bill comes in. Either you pay it or you let the payment pile on to the next month. It is nearly impossible to avoid debt. It comes in the form of credit cards, a line of credit, personal loans, a student loan you had taken, a home loan you are taking, a car loan you plan on taking, etc.
The important thing is not to get into a debt sinkhole where you are overwhelmed with the amount of debt you have to pay and you can’t manage them. So, how do you stay on top of it?
Pay it Every Month
Ensure you pay your credit cards bills and any loan debts every month before the due date. It can be tempting to skip it and let the sum pass over to the next month, especially if you are strapped for cash now. You need to make sure that you always have sufficient money to pay the debts piled at the end of the month.
– Budget: Start making a monthly budget for yourself so you can plan your expenses, savings and amount to be given to your debts. This is a planned approach which ensures that you have money to pay towards your debts at the end of the month.
Pay more than The Minimum
If you want to pay off the balance quickly and reduce the toll that interest rates on you, don’t just pay the minimum amount, pay how much ever you can. You should do this especially for any loans you have taken.
Focus on the Biggest or Smallest One First
Because of interest rates, you are never just paying back the same amount you borrowed. With time, the loan amount increases, you need to aim to pay it off as soon as possible. One way to do it is to either focus on the biggest or smallest debt first. This way you can slowly start eliminating the loan debts.
Don’t take on More Credit
Keep a watch on your income and debt ratio. It is a fantastic indicator of how much debt you can manage. If the ratio is slowly becoming unbalanced and your income can’t handle the debt, it is a clear sign that you cannot take on any more loans or credit cards.
Rather, you need to focus on paying of your debt and bring that balance back.
Speak to a reputed Debt Consultant
Honestly, every person’s situation is different and that demands specific solutions to staying on top of your debt. A debt consultant is superb at providing just that. He will take your situation into consideration from – whether you’re single or the bread-earner of the family, if your profession has special conditions like an inconsistent pay cheque or you have large financial plans in the future.
Staying on top of debt is extremely important. Once you slip into a debt sinkhole, it can ruin your financial situation and keep you there for a long time before you can pay off all the debt.
