What are the various ways to manage debt

What are the various ways to manage debt

A debt, irrespective of the amount, requires constant management of money to make the due payments on time. Juggling different payments is a normal phenomenon when it comes to borrowing.

Some of the ways to efficiently manage your debts are:

Knowing exactly how much you owe
Take out time and make a list of the total amount you owe, the name of the creditors you owe, and the due dates. Having everything in front of you will help you see the actual picture and where you stand financially. Make periodic changes in the list as and when you pay off your dues. This will help you to keep track of your payments.

Pay on time
Paying your bills after the due date comes with penalties which will again accrue to paying off your debts. Set a reminder on your phone for when you need to pay the bill. Even then if you miss out due date, instead of waiting for the next one, try to pay out as and when you remember.

Pay out the minimum amount
In case you are in no condition to pay off the total amount of the debt, it is advisable to pay the minimum amount at least. It will certainly not make up for the entire debt burden, but it will keep your debt from growing. Missing due dates makes it even harder to catch up with the repayment and eventually may result in your accounts marked as default.

Create a monthly payment calendar
This will help you understand which payments need to be made with which paychecks. It makes things much easier. You can pay off your dues as and when you get your salary. It comes as a fresh breath of air each month when you clear all your pending dues.

Prioritize your payments
Sometimes, it can difficult to understand which payment needs to be made first. But, paying out the dues for your credit card bills is often the best way to get rid of pending dues. Since credit card bills are associated with higher interest rates as compared to others, it is better to pay it off first.

Keep an emergency fund
Always keep emergency savings handy. One can never predict when something could arise and when you could need money. If you do not have enough savings to cover up emergency situations, it will add up to your pending dues, which can make matters worse. Keep a separate fund only for emergency situations. Make repayments from your monthly paychecks and keep the emergency funds aside. Even a little fund may be of $1000 can prove to be quite helpful.

Going slow but steady towards paying out your dues lowers your burdens. Make sure to clear your dues as and when possible so that you can live debt free.

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