Money is an important thing that will help you to buy things that you need and want but it is essential that you save them as well. Since money plays a very significant role in your life, you will need to manage it properly and strategically. This will give you a lot of mental peace, financial strength and happiness as well.
Therefore, if you find yourself in a sticky situation you must know the ways to manage your debts and handle the situation. There are many such ways that are easy as well as effective in managing your money and pay all your debts off easily and quickly.
Budgeting is one such way which is perhaps the most significant aspect of crafting a strategic and proper debt management plan. A proper budget will help you to:
- Know your source of income
- Know all your expenses
- Curb the unnecessary expenses or those that can be postponed temporarily
- Evaluate your assets and liabilities to find the net worth
- Consider all your debt obligations and
- Create a plan to pay off your debts accordingly.
When you make some alterations and curtailments in your spending habits, you will be able to save a lot of money and pay off your debts effectively without fail.
Another important aspect of finance and debt management is negotiating with your lenders, especially when you have multiple credit card debts that you want to settle for a reduced amount. However, you are advised to go through several debt settlement reviews to be sure that this is the best possible option as compared to debt consolidation, balance transfer and filing for bankruptcy.
Considering other options
You must look beyond budgeting and negotiating to ensure you have a strategic debt management plan designed for you. You may even consider consolidating your debts. This will help you in several ways such as:
- You will reduce the number of debts by rolling them into one
- You will have only one monthly bill and creditor helping you in keeping proper track of your payments
- It will eliminate the chances of falling behind on debt
- It will reduce the number of your monthly bills
- It will have a bigger loan, the lower rate of interest and an extended time period to repay your loan.
A balance transfer is another way to consolidate your debts, especially credit card debts. However, you will be better off if:
- You calculate the Annual Percentage Rate or APR before you choose a particular card for balance transfer and
- Also, consider the interest-free period to find out whether you will find it comfortable to pay your entire debt within this introductory period.
You can also take help of the expert debt counselors to decide which method you will follow to repay your debts, snowball method or avalanche method. The counselors will help you in many ways such as:
- They will help you to prioritize your debt whether you it will be feasible to pay the high-interest loans first and then the low-interest ones or the other way round considering your financial situation.
- They will also give you helpful tips about whether or not you should stick to secured loans or unsecured loans when you want to consolidate your debts. Ideally, stick to your secured loans is considered to be the most useful way to improve your credit score as you will have more money in hand to repay your other debts once you pay these off in full.
In short, the debt counselors will help you to get a better idea of debt and finance management, easy and effective disbursement, and to choose the most viable and feasible option.
Different types of debts
When you consolidate your debts it will have a positive effect on your finance and debt management. However, you will need to consider all different types of loans that are there such as:
- 0% APR credit card
- Personal loan and even
- A home equity loan.
You must choose the one that will best suit your purpose, financial condition and your ability to repay it on time and on a regular basis. This is another aspect in which you can take help of a credit counselor.
Suitability of debt and its payment will largely depend on the available cash. It will also depend on other aspects such as:
- Your financial resources
- Your credit score and history of payments
- Your personality and
- Your willingness to get rid of your debts.
Therefore, if you want to make a strategic plan to pay off the consolidation loan, you must first consider your financial strength and then weight it with the pros and cons of each of these available loans.
Take the help of the experts
You will need to choose the right type of loan to repay your existing loans simply to assure that you do not find yourself in further debts. A credit counselor will help you to make such a choice as well as suggest the best and most effective ways to get rid of your debt.
You will need to know the basics of financial management as well that will help you to create a corpus by curtailing a few of your expenses to repay your debt. Apart from all these, the credit counselors will also help in negotiating with your creditors to reduce the rate of interest or to get some waiver in fees.
The credit counselor will also help you to plan your repayment options which will involve:
- Analyzing your debts
- Prioritize these
- Plan for your repayment.
Lastly and most importantly, they will be by your side till the time your financial stability is restored. They will analyze the terms and conditions attached to all the different types of loans available. They will make sure that the rate of interest is lower than the average interest rates of all your multiple loans. They can even help you to choose a bank or a credit union to take out a consolidation loan.
Therefore, planning is the most crucial part of the finance and debt management which starts with budgeting and ends with financial freedom.