Sometimes in life, we may find that our financial situation requires us to ask for a little help, specifically through the forms of loans or credit cards. However, it can be easy to fall into the trap of acquiring too much debt and starting to feel the pressure from monthly payments, interest and charges. In some cases, we can get more than we bargained for when it comes to debt and it can leave you worse off than when you started. For those who are first time credit appliers and those who have accrued a little too much debt and now feel overwhelmed, here are some simple tips to help with effective debt management.
Shop around for the Best Deals
Different banks and lenders provide different deals and features when it comes to credit. Make sure you look around for products that have the best interest rates and will not leave you in more debt. This is essential for those who are applying for credit for the first time as they can be unsure of what types of products are out there. It will give you a good indication of features and deals that can help with managing and using credit efficiently.
Do I need it?
A question you should ask yourself before applying for any form of credit, as you should avoid acquiring more credit in order to pay off debts. It will more than likely push you further into debt. If you feel that you are struggling financially, an alternative would be to try and budget more efficiently. If you are in a position where you cannot manage your debts, budgeting is an effective tool to limit your spending and pay debts off.
Pay Bills immediately
This should be a top priority in debt management. Failing to pay bills on time will not only result in charges for late payments, but will also have a negative impact on your credit score. This will lead to lenders turning you down for future credit. By paying them on time, you will not only avoid high charges and paying more than the minimum (if you can) will mean that the amount owed will decrease faster. To help with paying on time, you should set up direct debits from your account to cover the payment.
Know what you can afford
Another important suggestion is to know whether you can afford the loan/credit card and if it is worth applying for. Will you be able to manage it? By calculating how much you can afford to borrow, you will avoid accumulating too much debt in the future. Decide what you need and work out how long you will need it for.
Effective debt management will help you avoid financial trouble in the future. While it isn’t rocket science, knowing your limits can be tricky. There are financial companies online that are able to assist those who have had trouble with credit in the past and can suggest products that will not only help in repairing your credit score, but they will only suggest products that are beneficial to you.
Bill Turner is a freelance writer turned entrepreneur who spends his free time doing various sports. His favourite is rockclimbing.