8 Tips to Manage Your Debt Better

Tips #1 – Have clarity of how much you owe. It is impossible to manage anything unclear. List down all your loan commitments and find out what is the interest rate for each loan. Call you banker to get the “Effective Interest Rate”.

Tips # 2 – Understand each of your debt to find out the cause why you are in debt in the first place. Avoid getting into debts again unnecessarily. For example, using credit card to purchase unnecessary luxurious stuffs should be eliminated when your cash flow is tight.

Tips # 3 – Stop using credit card. You might feel tempted to use credit card when your cash is tight. But, this is not encouraged as it will build up your debt till a stage it is too hard to manage. You shall spend using cash so that you spend only what you have and not what you don’t have. Ask your spouse or family member to hide your credit card.

Tips # 4 – Restructure your loan. With the reduced interest rate currently, if your cash flow is insufficient, it is time to check whether it is possible to restructure your loans at lower interest rate and / or prolong the loan repayment period.

Tips # 5 – Take advantage of balance transfers for credit card debt. An individual can transfer the outstanding balance from one credit card to another, at longer repayment duration and lower interest.

Tips # 6 – Have a budget in place to control expenses. Budget will help one to understand the spending habit and reduce unnecessary spending.

Tips # 7 – Place your extra cash into flexible loans to reduce daily interest. At the time when saving interest rate is low, it is also wise to put your emergency fund to flexible loan to cut down the loan interest. Ensure the loan is the “flexible loan that allows flexi withdrawal of any advance payment”.

Tips # 8 – Find ways to increase your income. When there is more cash, channel them to the highest interest loan.

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