How to Manage Debt
Having debt can be beneficial if you are able to manage it effectively. This is because not all debts are the same – there is ‘good debt’ and ‘bad debt’. For instance, if you have taken on a loan to invest in stocks, it is usually considered ‘good debt’. If you have borrowed money to pay off your credit card loan, that would be regarded as ‘bad debt’ since the debt will not yield any value over time or add to your wealth. In the following article, we offer some tips to help you manage your debt so you can begin your path towards a brighter financial future.
Tips to Manage Debts
1. Make a budget
Make a budget to see how much of your earnings are going to servicing debt and how much is spent on interest and processing fees.
2. Assess what you owe, earn and spend
If you have more cash outflows than inflows, you need to re-evaluate your finances to see where you can cut down on non-essentials and pay off your debt quicker.
3. Group your debts
Having multiple debts means paying multiple fees and interest charges, which push up your debt. Try to group and renegotiate your debt to pay a single and lower interest rate.
4. Pay as much as you can on time
When repaying debt, you usually get an option of how much you have to pay. Try to pay as much as you can, rather than the minimum amount. Check your lender to see if they allow extra repayments and make additional payments to let your debt decrease quicker and save on interest charges.
5. Have a savings plan
Whilst it is necessary to repay debt, you should also have a rainy-day fund ready for any accident or mishap that could affect your income or debt repayment capacity.
6. Reach out to Debt Free Australia for help
If you are facing problems in repaying your debt, reach out to us to discuss your situation.
If you need professional debt help, contact Debt Free Australia today. We’ve helped thousands of Australians with their debt problems, so you can trust that we can help you too. Our licensed financial advisers offer impartial and confidential advice so call us today, free of charge, on 1800 676 598.