Debt Management and Keeping Track of What You Owe
As we go through the years, we find ourselves accumulating a fair amount of debt. It could be from student loans, tax, credit cards, the list goes on. But we don’t always keep track of the amounts we owe. We may be completely in the dark about having a bad credit score.
In fact, this could possibly go over our head until the moment we lay eyes on a worrying bill. So if you feel like you’re struggling to stay afloat, take a look through these tips on how you can stay on top of your debts:
Listing the debts
This will mean digging through your bank history and trying to uncover anyone and anything where payments are outstanding and how much they are costing you moving forward. That brings us to the next point…
Prioritising the debts
You’ll typically come across two types of debt: long-term and short-term. Long-term debts usually consist of bonds, lease obligations, pension benefits, student and even bad credit loans.
You’ll probably have a few months (or maybe even years) before you have to cross the long-term debt bridge.
Short-term debt, such as credits card debt, should be your first priority, considering they often have a higher interest rate.
Trimming the fat
While you need to pay off your debts, you still need a decent amount of money in order to live, so you should consider making a few cutbacks in your life.
Maybe hold off buying that designer watch you had your eyes on. Some people even abstain from beer during that time (painful though it may be).
Have emergency savings as a safety net
A lot of people don’t like to keep all their money into one big pot. They have a little nest egg which they add to over time. Could be used for the children’s college, a new car etc.
The type of investment you leave to grow. But as the debt piles up, you may find the need to cash in. Might hurt, but it helps to have another sum of money sitting there.
Look into debt consolidation loans and balance transfers
Under the right circumstances, debt consolidation loans and balance transfers can be a good way of drumming down the debt. Your credit cards will definitely benefit from having a lower credit rate, especially if you’ve previously endured a bad credit score.
It should be advised that when taking out a debt consolidation loan, you don’t want to risk falling back into the same spending patterns so keep track of what is going out of your account and what it’s going towards.
Once you’ve worked out how much your debts are costing you, set up a timetable of when you’re going to pay towards something and how much. And then make sure that you stick to those deadlines.
This will help settle you into a sense of routine and you’ll be able to take some comfort in knowing that you’re chipping away at the debt.
Download an app
There seems to be no limit of what an app can do for you. If you want to really keep track of how much you owe, you should download one of the many secure online apps that keep track, collates and catalogues what and where you owe, and can possibly give you a wake-up call if a deadline is looming.
There are many free apps you can turn to, and they don’t charge a pretty penny, so don’t worry about being out of pocket.
Look for the light at the end of the tunnel
When you’re trying to pay off your mounting debt, its easy to become stressed at the prospect of having little or no money in the bank, or potentially worrying about legal repercussions.
So you need to take the time to look after your mental health and keep a clear head. Managing the debt requires you to have your wits about you, after all.
These points may not make your debt magically disappear overnight, but they will allow you to put systems in place to alleviate the financial strain while still able to live comfortably.
They may feel like small steps, but they’ll make a big difference to your bank account.
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