Debt is a double-edged sword. If you borrow strategically and repay smartly, you can use debt to your advantage and enjoy positive outcomes. On the contrary, if you borrow too much and adopt poor financial habits, it can push you into a deep trap. If you belong to the second category, improve your debt management by following these tips.
Compile a Debt List and Maintain It
Create a list of all your debts and arrange them in terms of serious consequences. First, write about the debts that are directly affecting your home, such as bills and unpaid rent. Second, write about the money owed on credit cards or overdrafts. Next, add columns for the following:
✔ Total debt amount
✔ Monthly payment
✔ Interest rate
✔ Due date
Take a peek at your credit report to make sure you aren’t missing anything. Keep updating the list every month as you pay off your debts.
Make Timely Payments
Paying late comes with repercussions – you have to pay late fees. Once you miss two successive payments, your interest rate and finance charges, both will shoot up. Fortunately, with today’s software and apps, it has become easy to set up alerts and get reminded beforehand.
If you’re in debt and consistently coming up short each month, evaluating your habits might be the best idea yet. No matter what, it makes sense to look at the small ways you’re spending money daily. That way, you can evaluate whether those purchases are worth it — and come up with ways to minimize them or get rid of them.
If your expensive habit is smoking or drinking, that’s an easy one — quit. Alcohol and tobacco do nothing for you except stand between you and your long-term goals. If your expensive habit is slightly less incendiary – like a daily latte, restaurant lunches during work hours, or fast food — the best plan of attack is usually cutting way down with the goal of eliminating these behaviors or replacing them with something less expensive.
While planning to manage your debt, compare the pros and cons of loan consolidation. It is a process that merges multiple loans into a single one. What makes this a tempting option is that it comes with a markedly lower interest rate.
Make Minimum Payments
No matter how tough your finances become, try your level-best to make the minimum payment. In this way, you can prevent late fees and ensure your accounts don’t go into default.
Consider getting a Seasonal or Part-Time Job
With the holidays coming up, local retailers are on the lookout for flexible, seasonal workers who can keep their stores operational during the busy, festive season. If you’re willing and able, you could pick up one of these part-time jobs and earn some extra cash to use toward your debts.
Even outside of the holidays, plenty of seasonal jobs may be available. Springtime brings the need for seasonal greenhouse workers and farm jobs, while summer calls for tour operators and all types of outdoor, temporary workers from lifeguards to landscapers. Fall brings seasonal work for haunted house attractions, pumpkin patches, and fall harvest.
The bottom line: No matter what season it is, a temporary job without a long-term commitment could be within reach.
Build an Emergency Fund
You may think that while paying off debt you don’t have money to save, but saving is important. Life happens, and if anything comes up, like a job loss, medical bill or car repair, you need to be able to cover it.
When you don’t have savings, you are forced to take on more debt to pay for your emergency expenses. To prevent this scenario, many people create a small emergency fund to help them in a tough time. So, how much money do you need? Ideally, your emergency fund should be big enough to cover six months of living expenses.
Keep in mind that getting out of debt needs you to create a proper course of action, which you have to stick to. If you feel filing for bankruptcy, pursuing debt consolidation, debt settlement or any other option is right for you, talk to Debt Dial Law and share your concerns. Based on your financial history and current situation, we will come up with a solution that can address your debt woes quickly.