Sometimes life dishes up unexpected expenses. And when it does, you might find you have accumulated a substantial amount of debt.
The most critical part of managing debt is knowing exactly how much you owe. The worst thing you can do is ignore it and pretend everything is OK. This can affect your credit score and your ability to apply for loans in the future.
Managing debt can feel overwhelming and stressful but with planning and discipline, you can take control of your money matters.
To help avoid feeling overwhelmed and stressed, here are three things you can do.
Debt management tips
- Know exactly what you owe
First, find out how much you owe altogether, how much you can afford to repay and when you can expect to pay it back. Track these amounts in your budget.
- Limit your debt
Any debt repayments should be part of your weekly or monthly budget. However, repayments can still add financial pressure even when you understand your debt situation, so try to limit your payments.
- Communication is key
If you’re struggling to meet payment deadlines, try communicating with your creditors to see what assistance they can offer. You may be able to negotiate deferred payments or an extension, the ability to pay in instalments or reduced payments for a set amount of time.
Triage your debt
When it comes to prioritising and managing debt, I recommend tackling the biggest or hardest challenges first. Priority debts can include mortgage or rent payments, utilities and council rates and car repayments.
However, don’t forget about the small debts, such as internet and phone bills and credit cards, as these amounts can still attract interest or late fees. Look at what you can realistically afford to pay back as part of your budget.
It’s also a good idea to have emergency funds set aside in your budget that you can dip into if you need to.
Manage your money matters
It’s important to remember that you’re in control of your finances – this means your budget and savings plan as well as your buying decisions.
Making better buying decisions can really be the difference between achieving your financial goals or falling short.
Gimmie helps you achieve your financial goals by giving you the flexibility and control to make purchases and pay over one or two years – in weekly, fortnightly or monthly instalments that suit your lifestyle.
For more financial education tips, head to On the Money with Mark Bouris
