In today’s credit driven society it is very rare to come across an individual who is 100% debt free. Credit cards, HECS debt, mortgage and personal loans – whatever your circumstances, chances are you have a combination of many different open lines of credit. Effectively managing this debt is one of the most valuable skills you can learn and can have a significant impact on your financial options in the future.
Mitigate the debt
At the heart of this technique is the concept of borrowing only when needed. This means borrowing appropriate amounts of money for discrete and legitimate purchases such as bond deposits, car loans or medical bills. Loans to bridge the gap between pay days should be avoided where possible and you should assess each loan individually to see whether it meets your various short and long term needs.
Approach repayments systematically
Some debt is unavoidable and is even beneficial to your future financial options. The trick with managing the debt you do have is approaching it systematically. Once you have established open lines of credit, you must approach repayments as part of your regular financial routine. Including these payments in your weekly budget will ensure you have the capacity to meet your financial commitment.
Consider each loan plan carefully and see if there are any alternatives or way to negotiate the best out of your loan. If you find yourself falling into deep debt, think rationally and take steps to reduce the problem before it gets too large to handle. The best way to avoid large amounts of debt is to stay realistic in your borrowing habits and always keep the bigger debt picture in mind.
Managing one’s debt is an ongoing and active process – a combination of small financial behaviours that culminate in a responsible and sustainable approach to one’s personal finance. If you would like more information about your personal financing options, or would like to learn more about responsible debt management, go online or contact Cash at Call’s financial experts today.