Debt Management Tips
The best debt management tips are never to incur any debt. "Neither a borrower nor a lender be". Shakespeare said this. The thing to remember is that William Shakespeare did not live in the plastic age. Very few people nowadays have cash with them to buy their dream car, a home to live, household appliances, a new personal computer or any of the other consumer durables or assets. That is the reason why we become borrowers through different types of loans like student loans and credit cards. This results in the problem of personal debt management.
These days debt management is more than just paying debts. It now involves walking the fine line to make sure that you have credit available the next time you have another need. You have to begin debt management before you begin a borrower.
1. Keep a track of your money. Keep an estimate of how much you have and how much income you will have in the near future. Keep a record of your monthly expenses so that you will have an idea of how much you have to pay to your lenders.
2. Before you become a borrower you should have enough money saved with you. Become a borrower when you have a pile of cash. This may not always be possible but it is possible to have a reserve of money so that you can deal with financial difficulties if you get laid off.
3. Do a lot of research before you begin borrowing. Compare the loan offers you get to choose the one which has the lowest interest rate. If you are going for a mortgage, go for a fixed rate mortgage, where you will be paying a fixed amount every month.
4. Always read the loan document carefully before signing it.
5. Prepare a debt management plan so that you can pay back before you borrow. If you let your lender make all the decisions then you are in trouble. This holds true if you are in credit card debt.
- Whatever you have purchased through your credit card should be recorded.
- Always set a goal for paying credit card debts, keep this time period as three to six months.
- If you purchase small items pay up immediately otherwise you will end up paying a lot of interest.
- Pay the interest amount in advance by calculating it. This will help you in avoiding interest on accrued interest. For example, if you purchase a TV for $24, the interest will be $100, so you should actually be paying $124.
6. Always arrange your debts in order of priority. Your home loan should come first and credit card should come last.
7. You should be aware of your rights as a debtor. You can go to the FTC website if you are a citizen of the US and learn about your rights as a debtor.
8. Always refer to the experts. You can get valuable information on the internet and on television and also in newspapers. There are plenty of magazines and books for on saving money for everyone. Be careful, however, while taking advice.