Shakespeare did not live in the age of the plastic cards so he could say “Neither a borrower nor a lender be,”. In recent times how many people have ready cash in hand to buy a house, car or even pay off emergency hospital expenses?
Taking out loan has become common in the current economic scenario. However, rapid increase in loan application has also given way to speedy hike in number of consumers entrapped in debt. So this article would help you with smartest debt management tips that would help in the process to organise your debt and pay it off.
1) Try to avoid borrowing:
Are you planning to take loans to pay off your existing debts? Then give it a thought. As it might burn a hole in your pocket in the long run. It would be a herculean task to unburden you from the torment of debt. If you take another loan to pay off your existing debt then it would be an added burden on your shoulders. The money lender would charge you higher interest rate as there is risk associated with you since you are in debt.
2) Debts are curse:
If you are unable to manage your debt then you might consult a financial advisor. The proficient advisors would guide you to settle your debts. You can negotiate with the creditor not only to lower the outstanding balance but also the mounting interest rate charged on it. The repayment plan would be more affordable for you and this would help to manage to pay off your debt. The financial advisor with their able guidance shows you how you can avoid debt in the near future.
3) Check your expenses:
Make a budget that can check your reckless expenses. Make sure that your expenses do not exceed your income then the situation might be adverse. Make two columns one for the income and other for the expenditure. Calculate the total amount you spend each month and scan where your expenses are actually high. The moment your expenditure exceeds your budget try to restrain yourself from over spending.
4) Pay off your high interest debts:
Give priority while paying off the higher interest rate debts. If these higher interest debts are kept for the last moment then the soaring interest rate added to the outstanding amount would make the payment plan unaffordable for the pocket.
5) Avoid using credit cards:
In order to avoid getting further trapped into the maze of debt, stay away from the use of credit cards. The plastic card tempts us to get things that are beyond our income as we cannot see the cash flowing out of the pocket. The impulsive shoppers have to bear penalty due to their reckless spending. But a limited amount of cash in your pocket would hold you back from over spending.
7) Use the facility of Mortgage Breaks:
If you go through the clause of the mortgage plan you might see that the debtor can take a break from the repayment plan up to 3 months. This break would be enough to settle your financial situation but you would not be exempted from paying off your debt.
In the meantime while you are on break the interest rate would rise and would get added to the outstanding amount. It would be wrong to choose mortgage break clause as an option for long term debt solution but can be used for a short term debt.
8 ) Negotiator with your creditor:
Ask your creditor to lower the interest rate as well as the outstanding dues by negotiating with him. He would consider lowering the existing debt to a reasonable amount if you show eagerness to pay off the creditor’s balance.
In this guest post Kevin Craig, the web master of Monsterhols.com would like to share few quickest and smartest debt management tips with the help of Pocketsmith.
9) Make an emergency fund:
In order to shield the unanticipated expenses one needs to save at least for 3 to 6 months. The saved cash can rescue you from unexpected emergencies.
10) Take help from FTC:
As a debtor you should be aware of your rights. If you want a valuable information and efficient management of debt the Federal Trade Commission is an exceptional source for help.
These few simple but smartest tips would help you to restrain yourself from the labyrinth of debt. Follow these points that might help you to achieve a secured and a debt free life.