Are you swamped with multiple loans and various monthly bills? Chances are, your debts could be snowballing as you struggle with keeping up.
There are many solutions to resolve this issue, and one of them includes having money management skills. For instance, if you’re struggling with your credit card expenses, then you should close some of your credit card accounts or omit the use of credit cards altogether.
However, if you’ve accumulated debt from several moneylenders and you’re barely able to pay off the high monthly interest rates, then that’s when you should consider acquiring a debt consolidation loan. This works by having a licensed moneylender or financial institution pay off all your unsecured debts. After, you’ll just need to focus on making your repayments to them.
While it simplifies your debt repayment process, it doesn’t mean that you are debt-free. So, if you decide to take up a debt consolidation plan, then here are some tips to help you manage your debts effectively!
1. Be realistic about your repayment schedule
There’s nothing wrong with looking at the big picture: to be debt-free. But realistically, you’d also need to take into consideration the steps you’ll have to make as you work towards your goal. So, instead of opting for a higher monthly repayment sum to quickly settle your debt, think about your other financial commitments. This includes your day to day expenses, other secured loans and the like.
When you over-commit to a high loan repayment amount, you might end up compromising your ability to settle other bills. With that, you must be aware of your commitments so you can select a repayment schedule that’s sustainable in the long run.
2. Manage your monthly expenses
To be aware of your commitments is one of the most essential financial obligations, and this is when budget and financial planning comes into play.
List down your financial commitments before sorting it based on priority. If there are any expenses that you can do without, consider reducing or eliminating it.
To illustrate, ask yourself if having a car is necessary when you have an outstanding car loan. Perhaps, taking public transportation is better than owning your own vehicle. If you’re dining out, is there any way to cut down on dining expenses? If not, you can consider preparing your own lunch box meals!
These small changes may not seem like it’ll make a huge difference. But when you start mapping out your finances, it’ll be easier to ascertain what’s essential and what sacrifices you can make to be debt-free.
3. Be in control of your credit card expenditure
When you freely spend through your many credit cards, your bill will undoubtedly skyrocket. Even then, you can settle to pay for the minimum repayment sum. But sometimes, things can take a turn.
The late interest fees can go over 25% per annum if you fail to settle your credit card payments. Slowly, the amount will exacerbate, and you might not be able to pay off your remaining credit card debts.
Even though credit cards can benefit in terms of cashback and rewards, it’s better to have one card or none if you aren’t able to manage it properly. And if you still can’t control your spending with one card, then you might want to refer to your budget and reevaluate your spending habits.
4. Compare and select the loan package that suits you
Aside from comparing differences in interest rates across the various debt consolidation plans, you should also consider other terms such as the repayment period and late payment fees.
Take note that as you pay off your debt, you’re not only working towards clearing your debt but also, improving your credit score! So, if you ever need to take up a loan in future, the chances of getting an easy loan approval are higher.
You’d also need to factor in your needs and preferred repayment schedule before settling with your preferred licensed moneylender. But if you find yourself needing some guidance along the way, you can always contact us at Easyloan.com.sg.