5 principles of Debt management
All too often, people make the huge mistake of simply not paying their debts on time or neglecting them. This is often due to being unable to pay off large amounts all at once or in installments and left over is felt like a never-ending cycle of repayment. Instead of hoping for a big windfall from your friends and families, you can start to take control of your debt and settle it down by opting for an easy payment method. In order to pay off your debts in the simplest way, you need to understand a few principles of debt management. With paying off your debt your stress will be managed, and you will actively work towards a better financial future.
Here are 5 principles of debt management that will get you started on the right path and keep you there.
1. Understand Your Debt.
Understanding your debt is one of the most significant parts of debt management because it requires you to take an honest glance at what you owe. The list includes:
- Amounts owed.
- Interest rate charged.
- Due date.
- Any relevant expiration dates. For example, some credit cards may offer a low introductory rate. You want to be aware of when your rates could increase.
During this process, it is imperative for you to even understand your credit score and cibil score. Both needs to be balanced with a positive number.
2. Make a Budget
Once you have a gist of what you must pay, the next principle of debt management is to create a practical budget that you can follow to control your expenses. In the beginning, it might seem like you are depriving yourself. However, it will help in prioritizing your spending so that you can enjoy a better financial future by paying off your debt as well.
3. Only Charge Long-Term Purchases
Majority of people in India find credit cards a better and easier means of monetary expenditure. But the deepest darkest truth reveals itself when they get the credit card bill in their hands. Maintaining a proper form of budget can also help you to avoid using credit cards for smaller or daily expenditures. Don’t forget that those small expenditures will later become a burden to you if you don’t pay them off. Hence, try to only spend on major or long-term assets that can be paid in Easy Monthly Installments such as furniture or different appliances.
4. Pay Off Debts with Higher Interest Rates First
You will initially want to put as much money as possible towards each bill, but SingleDebt has the most effective strategy to begin paying off the debt that comes with the highest interest rate first. By doing this, you will avoid the formation of a debt mountain over your lifetime. Instead of continuing to pay interest, you will be contributing money to paying down the principle of the debt.
5. Don’t Be Afraid to Negotiate and Ask for Help
Don’t you think seeking help from a debt counsellor might be a better choice to wave off your debt when you are in need? If you are unable to pay your debt, have exceeded your interest rate, or experiencing delays in payment after the due date, or are facing harassment from collection agencies, then SingleDebt can assist. We help you manage your debt by settling it with your creditors. All you need to do is register yourself with SingleDebt and let us take you on a debt-free journey at an affordable rate.
Debt management is about taking small, strategic steps that help you work toward your goal. Trying to tackle it all at once can feel overwhelming and discouraging, but if you follow these simple debt management principles, you can make meaningful progress. Don’t wait any longer to start paying down your debt.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. City Credit Management LLP is not liable for any decision arising out of the use of this information.