You may be plagues by student loans, credit cards and personal loans. How to get out under the burden of debt. Working to pay off debt while drumming up sufficient savings for future may pose a challenge. You may have several competing priorities, but make sure that you make minimum payments on your outstanding debt. The necessity for building a savings buffer and a small contingency fund for emergencies. Ensure that you payoff credit card debt first as this is the highest cost debt and interest payable on this is huge. One of the tried and tested methods is the 50:30:20 plan method where you use 50% of your earnings towards living expenses, 30% of your earnings to paring down debt and 20% is used for emergency funds and savings. Remember that high levels of debt may result in lower credit scores and also affect your capacity to save.
SingleDebt is a well established financial advisory and debt management company which can provide financial advice as well as structure plans which help you to pare down debt and build up your savings.
Put down all your living expenses and analyse your debt payments by category. Segregate them by category by ranking them from high-cost debt to low-cost debt. Calculate your requirements for an emergency fund.
You can follow two methods either Debt avalanche method pr debt snowball method. In a debt avalanche method, you pay off the highest cost debt first before you start paying the smaller debts. The advantage of this method is that you can off the more expensive debt which generates higher interest savings and reduces the loan instalments payable in the future. In a debt snowball method, you make the smallest debt payments first , like the minimum payments in a credit card bill payment. This reduces the chances of default while you gather funds to pare your debt more.
The credit reports from various agencies will help you understand your credit. Make sure that you address any inaccuracies. In the report and track your payment history.
You can use the services of SingleDebt to consolidate your debt into a single manageable amount or if you have large outstanding balances, make a loan settlement and negotiate with your lenders to pay a lower amount. All these strategies help you to reduce your debt to manageable levels. Making a balance transfer on your credit cards also helps to reduce your overall credit card debt. Converting credit card debt to personal loans reduces your interest costs.
Reducing your unwanted expenditure is a surefire way to pare down totally debt. This way you can also divert more funds towards savings.
Where possible when you have an unexpected windfall, ensure that you increase your debt payments to significantly reduce your debt burdens. The faster your debt decreases, the faster you can build up your savings.
Most people do not plan for emergencies by building up an emergency fund. An emergency fund helps you to meet unexpected medical emergencies and other financial crisis situations. Try to avoid using your credit card for emergencies as this will increase the total level of your high-cost debt. Don’t make debt a revolving door in your life. Ideally, emergency funds should cover atleast 3-6 months living expenses.
When you contemplate creating a savings pool, there is a trade off between paying off more debt and saving your money. Remember you get tax deductions on interest that you pay and also on certain investments. Ideally you should aim to save 15% of your pretax income towards savings every year to build up your retirement corpus. The temptation to pay off debt may be great but try to make a savings plan and stick to it no matter how great the temptation to spend.
This includes investing in mutual funds like equity and bond funds, real estate and term insurance. Term insurance premium is a small amount and provides financial support if the unexpected happens. In addition, the investments that you make during your lifetime help you to pay for your living expenses during retirement. When you are young, you can invest in more risky investments including a large proportion of equity funs and adopt a more balanced approach when you grow older with a mix of debt and equity funds to moderate your risk.
A professional financial advisor like SingleDebt can help in better management of your debt and also in prudently managing your financial savings. You can enlist the help of financial advisory services like SingleDebt to manage your debt and accumulate a retirement fund.
Reducing debt and increasing savings are crucial steps toward financial stability and independence. At Single Debt, we offer tailored solutions to help you achieve these goals. By assessing your financial situation, Single Debt can create personalised debt reduction plans, focusing on strategies such as debt consolidation, negotiation for lower interest rates, and restructuring loans. This approach simplifies payments, reduces financial stress, and accelerates the journey to becoming debt-free.
Additionally, we emphasise the importance of budgeting and financial education to increase savings. Through our expert guidance, clients can learn to prioritize savings, set realistic goals, and develop sustainable financial habits. By helping you build emergency funds and save for future goals, we enable you to establish a solid financial foundation.
Moreover, our ongoing support ensures that you stay on track, adjust when needed, and avoid falling back into debt. With a commitment to providing clear, actionable advice, we at Single Debt empower you to take control of your finances and achieve long-term financial health
Cut debt and boost your savings today with Singledebt’s specialised financial services.
SingleDebt specializes in effective debt management solutions, helping individuals and businesses reduce their debt and regain financial stability.
