Being in debt is a man’s worst nightmare, especially if the debt has reached extraordinary amounts that may find you guessing as to how it could be paid. Sometimes, the amount can shock you because you were unable to keep track of all your bills thus the high amount of debt you have.

Fortunately, if you find yourself having quite a lot of debt, there are tricks you can do to manage it and eventually pay them.

Here are some star tips to help you get started:

#1 – Make a budget chart

If you find yourself experiencing a shortage in your cash flow or certain delays, write up a budget chart of your income and expenses each month.

Seeing a clear chart of your expenses will help you allocate your budget easily, as well as identify which ones you need to pay immediately. You can also check which expenses cost the most and replace them with cheaper goods and services that will still help in the long run.

Make it a point to keep a journal of your cash flows to ensure no funds slip through the cracks in expenses you don’t really need. You can also reduce your luxuries for the time being until your finances are better.

#2 – Check your debt ratio

When considering taking up new debts, may it be a payday loan or a subscription, check your debt ratio and ensure it will not go over the 35% debt-to-income ratio. Every month, 35% of your income should go to your debts and it should not go over that. Going over that ratio will disable you from paying all your dues.

If you intend to take up a personal loan from a moneylender to pay off these bills, make sure you only borrow what you can pay. You should also not use personal loans to pay luxuries and use it only on things that have to be paid.

#3 – Monitor and track your repayments

Every month, make it a point to monitor all your repayments for outstanding loans and other expenses. Make full repayments and pay them on time to prevent late fees and other penalties.

Should you find it difficult to pay your repayment for your loans, immediately contact your moneylender to see if they can offer a flexible option that will help you pay your loans.

#4 – Pay large repayments when possible

When you find yourself getting unexpected incomes like work bonuses and other cash incentives, use the money to pay off your debts instead of using it for luxury and other fun activities.

If you will take out a loan, ask the moneylender about their terms for early repayments. When you get your bonus, pay the bills or loans which have high interest. If the sudden bouts of income are due to a salary increase, you can ask your moneylender if it’s possible to make the monthly installments larger so you can pay it off faster.

#5 – Check the interest charge

If you are listing off your expenses, check the ones that have the highest interest rate and it is most often your credit card dues.

Considering this fact, try controlling your purchases using these cards into an amount you can repay in full every month. If you cannot pay in full immediately, pay as much money as you can and refrain from using it until the debt is smaller in amount. Small credit card balances have small interest rates.

If you have a lot of debts from various sources, you can check out personal loans that double as a debt consolidation loan. These loans can bring together all your debts into one big debt and lower the interest rate significantly.

However, if you are going to consider this option, make sure that the loan offered to you has a lower interest for a long period of time. You must also check the terms and conditions of the loan since some moneylenders may have additional requirements for such loans.

#6 – Make a priority list

Before you get your salary or income, it is best you create a schedule list of all your debts so you know exactly which one to pay first.

Once you have this list, pay the debts that would put your assets at risk such as mortgage loans first. Then, you should pay off the ones with high interest and for the last, pay the dues which have short grace periods or if you are already facing legal action.

What to do if you do not have the funds to pay them?

If you have gotten yourself a personal loan and unable to keep up with repayments, it is ideal that you speak to your lender immediately to renegotiate the terms of your loans.

Moneylenders, in particular, are open to renegotiations as long as the reason for your problem is valid. They would also do their best to ensure loans are not forfeited since that would cost them more money.

If you failed to do this and defaulted, or just paid late, your credit rating will be placed at risk. You will also be unable to get better loans the next time you apply for one.

Final remarks

It is crucial for everyone to be careful when they have a lot of debts because the consequences of being unable to pay these debts can be difficult to handle. As early as now, make it a point to tally all your debts and study how it could be paid. When you make a tally and identified which bills should be paid first, adjust your spending accordingly.

Stay focused during this time that you are trying to manage your debts and do not stray from it. You will be able to buy that expensive luxury you are eyeing once you finish off your debts and ensure your budget is back to normal.

So, be patient!

Once you get a hang of managing your debts and paying them off, you will find yourself able to not just buy the luxury item you have been eyeing, but also keep yourself debt free for a long time.

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