If you’re reading this you’re probably having trouble with your debt management plan and may be in one or more of the following situations:
• Can’t pay all your bills;
• Don’t have cash to live on after paying your bills;
• Get calls from creditors reminding you to make payments; and/or
• Get letters threatening legal action if you don’t make payments.
These situations are enough to leave you with sleepless nights. But even the most dire circumstances have a solution.
Debt Management Tips:
Stop incurring further debt
If you’re paying for items with credit or store cards, you probably can’t afford it. You don’t notice what you’re spending when you hand over a card.
Set up a budget and stick to it.
List all your expenses. Write down the amounts you have to pay next to each entry. Don’t forget to make allowances for entertainment. If you use up the whole amount for entertainment by week two, then you’ll have to go without for the rest of the month. If you want to manage your debt properly then you’ll have to make sacrifices.
Cut out unnecessary expenses.
Do you really need to buy a sandwich for lunch every day or that latté from the coffee shop around the corner? Choose less expensive brands for groceries and other items. Cut down on going to the movies, snacks and dining out.
You can gauge if something is unnecessary by using the “want” versus “need” system. Next time you want to buy something, ask yourself if you really need it. If the answer is no, then don’t buy it.
Communicate with your creditors.
Contact your creditors and explain that you’re having trouble making payments. They will be open to negotiate more affordable repayment terms and/or lower interest rates with you. Contacting them shows that you are taking responsibility for your debt.
Pay off your most expensive debt first.
By this I mean the debt with the highest interest rate. The sooner you can pay this off, the more you’ll save in not having to pay ridiculously high interest rates.
Consolidate your debt.
Better debt management may show improved results with a debt consolidation loan. Use the loan to settle all bills and you’ll have only the loan to pay every month. This will free you from having to deal with multiple bills.
Although your repayment term will be longer, the advantage is that you pay a lower monthly installment and interest rate. Note that this will not work if you continue to rack up debt on your store and credit cards.
Consider debt counselling.
This is an option if you’re over-indebted (your expenses exceed your income). A debt counsellor can apply for debt counselling on your behalf to enable you to better manage your debt: make payments to all your creditors as well as having enough cash left for living expenses.
The worst thing that you can do is ignore unmanageable debt. All you need is a little research to see what your options are. You will feel empowered and more in control of your finances if you take that first step.
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