Managing your debt is a tricky task. For many people, living in debt is a way of life - but that doesn't mean it has to be a part of your life. Going into the New Year with a determined financial battle plan will give you a feeling of empowermentDetermine your current financial situation
Start by making a list of all your assets and liabilities. Evaluate your debts and consider making a 'debt checklist' to help you prioritise them – make sure essential payments are at the top of the list. These would include debts such as the mortgage, store credits, personal loans
and car repayments.
Plan a budget
Now that you have prioritised your debts and assessed your financial situation, you need to plan a budget. This will clarify your monthly income and expenditure, making it easier to allocate funds for payments and savings. Most people dread the idea of budgeting, but the benefits are unquestionable – budgeting will reveal exactly where your money goes, how much money you might be wasting on unnecessary things, and it will instil responsible spending habits.
Consider consolidating your debts. Many people find this to be a much easier and manageable way to pay off debts. It involves taking out one loan to pay off your other debts. A counsellor from a debt consolidation agency can negotiate lower rates on your behalf and can also act as a consolidator when dealing with your creditors. Make a list of local credit counselling agencies and do your research before contacting them - be very sure of the agency's legitimacy before setting up a meeting. The loan you take out can be secured or unsecured, depending on your needs and agreement with the debt consolidation agency. A secured loan is the more common option, as it provides the debtor with a lower interest rate. This is made possible due to the fact that people with valuable assets agree to a forced sale of the asset, should they default on their debt consolidation loan. This scenario, however, is highly unlikely as the bank will try and negotiate a payment option with you. Hippo.co.za also allows you compare personal loan quotes right here.
Save where you can
Find any possible way to save as much as you can each month. Don't give in to temptation at the shops when you see deceiving deals such as "buy 2, get 1 free." If you find it hard to stay away from temptation, try using an online organiser app
which can assist you with creating electronic shopping lists as well as help your entire family create a meal guide. Stick to a small, yet strict monthly entertainment allowance. Always shop around for discounts, buy an economic car, cut your fuel bill where you can and ditch your clothing accounts. Use your new surplus to service those nagging debts.
Being wise about how you spend and save your money is the difference between real quality of life and living from month to month. Start planning your financial future and security right away - you have no time to waste!