19/08/2019 by Jonathan McNair
How to Manage Debt through Financial Planning?
If you have a debt, whether small or big, you have to plan your finances to make your payments on time. Without proper management, you lose a major part of your paycheck clearing off credits. You end up borrowing fresh loans to pay off older ones. Managing your bills gets out of your control and you fall into a vicious trap. Crowe MacKay LLP offers debt solutions to clients in Vancouver and the surrounding area.
Financial planning helps you define your monetary goals; plan yourself or seek the assistance of a professional. An expert can assist you in setting up an efficient debt repayment plan and organize your finances. Together, you can decide on a budget to ensure a balance between monthly expenses and loan payments.
Debt solutions help you in setting your priorities right. You have to make a few sacrifices such as avoiding luxuries you can do without. Proper use of resources can get rid of your arrears completely.
Simple Tips to Manage Your Debts
If you are looking forward to a debt-free future, you must prepare yourself to successfully deal with financial worries and stress. Here are a few strategies you can employ to speed up the payoff process:
Plan a Budget:
Make a list to monitor your monthly income and expenses and see if you can cut costs anywhere. Classify categories like food, utility bills, and rent as essentials. Others, such as buying new home décor, can be categorized as non-essentials. Stop spending on them till your financial issues are sorted. Fill out our debt evaluation form to determine the best management option for you.
Create a Debt List:
Create an excel spreadsheet to keep track of your debts. Note down the creditor, monthly fee, and due date. This helps you prioritize which bills have to be paid immediately and which can wait. Refer to this list whenever you make payments and update it every few months.
Pay Your Bills on Time Every Month:
If you miss or delay your payment, you may have to pay a late fee. This increases your interest rate and finance charges. Use your computer or smartphone calendar to enter your dues and set an alert to remind you several days before they have to be paid. If you miss a payment, don’t wait until the next date. Send the money as soon as possible.
Make the Minimum Monthly Payment:
It gets harder to catch up when you delay your dues. Make at least the minimum payment every month if you can’t afford to give anything more. This doesn’t help you make real progress in paying off your debt but it prevents it from growing.
Prioritize Which Debts to Pay First:
Use your list to rank your debts in the order you want to pay them. Clear off the dues on your credit cards first as they usually have higher interest rates than others. Pay off the balance on the one with the highest rate and make the minimum payment on the others. You can also negotiate with your bank or credit card company to offer you a low-interest rate.
Make Use of Balance Transfer:
Penalties and interest charged on the outstanding amount on card bills add on to the total balance. Credit card balance transfer saves you from this as the new bank pays your outstanding balance in full and creates EMIs for the same at a much lower rate of interest. This helps you in saving a lot of money.
Stop Your Credit Card Spending:
Stop shopping with your credit card to prevent the accumulation of debt. Do not use it (even if you get cash backs and other rewards) until your finances are under control. You may have stored your card information on online shopping sites to make the checkout process easier. Remove it immediately so you don’t buy items you don’t need.
Sell Things You Don’t Need:
Take a look at your belongings and identify stuff you rarely use. Sell these items and use the money you get to repay your debt.
Get Rid of Expensive Habits:
Evaluate your habits if you consistently find yourself in debt. Look at the small ways you are spending money every day and decide on minimizing or getting rid of them completely.
These tips help you manage your payments. If you still find it difficult to pay your bills every month, you should seek the help of professionals. At Crowe MacKay & Company, we offer an extensive range of credit relief services and debt solutions to our clients in Vancouver and the surrounding area. Contact us today!