You cannot buy your dreams not until you’ve debts to pay & a savings account to fill.
Today whatever you need is available on the snap of your fingers in easy pay later or EMI options. You don’t have to worry about paying for the services now. You can do it later. Buy your dream car at zero down payment or watch movies at the cineplex every weekend; your credit card will take care of it. However, at the time of repayments, these debts are going to haunt you.
Here’s how you can manage these debts smartly:
Write down all your debts or repayments that are pending along with their tenor and the interest rates, in ascending order of interest rates applied. Doing so will help you prioritize the debt you want to clear first. Follow the strict discipline. Start paying off your higher-interest loans first, and then go down the list.
Budgeting is important while investing. It is vital in paying out your debts too. You need to make a budget based on the priority of the repayment of the debts. Doing so will help you pay off your debts without losing all your money. If you have any investments, try to use them for repaying the debts.
Always pay back all your debts as soon as possible, because it affects your Credit Score.
A bad debt alone can cripple your credit reports. So, make sure to pay all your debts in full so that; they won’t get accumulated for the repayments later. Also, as banks appreciate keeping a good repayment history, ensure that you pay on time; because it will help you grow a good credit report.
Once you’ve started paying on time, start analysing your expenditures as well. Always keep your expenses less than your income else; your debts will start multiplying again. The best thing to do is keep reviewing your bills; ask yourself, do you need that service or product? Asking these questions while buying can help you lower your unwanted bills
You need a haircut every month, but you don’t have to buy new hair products every week, or you need to carry a mobile, but you don’t need to buy a new one every year. So, stop doing things impulsively. Be more critical while purchasing anything and till you have not paid all your debts, stop buying from your credit card.
If you’ve long tenor & high-interest debts, it is advisable to take a consolidated loan from banks or credit unions to pay off all debts. Obtain a low-interest loan and pay off all your debts.
After inculcating the habit of repaying on time and in full, it is crucial to maintain that habit and follow it regularly till it becomes a discipline. Try not to accumulate debts again by buying impulsively or not scrutinizing your bills. Remember the debts piled up before can rack up again.
Everyone wants to live life comfortably. We all wish you to dine in our favourite restaurants every night, go on vacations with our friends and family, enjoy life to the fullest. But you’ve to remember that this dream demands a price that you might not be able to pay & then there will be liabilities and loans. So, figure out a mid-way because higher debts won’t let you fulfil your dreams.