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Debt Management Tips To End The Year With A Positive Financial Progress

October 8, 2020 By editor

The best way to end the year in a positive financial position is by following certain debt management tips. The truth is, debt is powerful enough to hold your finances back. This is why it’s very important for you to keep it under control.

In a consumerist society, it’s not wise to completely stop using debt. It’s possible. But you’ll miss out on a lot of opportunities if you do this. You’ll miss out earning passive income from real estate properties. You can also miss out on generous credit card rewards and loyalty points. You could have earned these if you used it to pay for your usual expenses.

You have to understand that debt is not really bad. The $12.68 trillion worth of debt of Americans is not all bad debt. More than ¾ of these debts are mortgages. This is one of the good debts because it can help you increase your personal net worth. You also have student loans that are also good debts because it increases your ability to earn higher pay.

You see, it’s not too bad to use debt. It can help improve your finances tremendously. But you have to learn to use it properly. And you also have to understand the responsibility that you have to meet when you have debt. This is where debt management tips can help.

5 debt management tips that will improve your finances

Believe it or not, you can manage your debts in such a way that will improve your finances. As long as you follow certain tips, you can regain financial control even while you are struggling with debt payments. And if you do things correctly, you probably won’t feel like your debts are a burden.

Here are 5 of the debt management tips that you can use to help improve your finances.

Decide what debt to pay off completely this year

It’s not enough that you make regular contributions to your debts every month. Try to make a commitment to completely pay off one debt this year. The end of the year is only a couple of months away so this might be a bit challenging. Choose a debt that has a low balance and create a plan that will help you pay for it by the end of the year. Just make sure you pay at least the minimum amount for the rest of the debts. Then use all the extra money that you have to pay for the debt that you’ve chosen to get rid of.

If none of your debts can be paid off by the end of the year, at least set a target amount. Try to have this amount paid off by the end of the year. This target will at least give one of your debts a significant debt reduction.

The goal here is to give yourself a huge reduction in your balance by the end of the year. If you can pay off one debt, that will really give you a huge morale boost. Hopefully, it’ll encourage you to keep going until you pay off every single one of your debts.

Have a definite repayment strategy

Another one of the debt management tips that you should do is to have a definite repayment strategy. Once you’ve chosen the debt that you will aggressively pay off by the end of the year, create a plan that will help you pay it all off.

There are a couple of debt relief options that will make payments a lot easier. You can opt for debt consolidation, credit counseling, or even debt settlement. Get a debt reduction if you have to. This will help lower the debt amount you have to pay.

Make sure that this plan will help you reach your target payments. But at the same time, you have to ensure that it won’t make your life miserable in the process. Leave yourself some room to have enough money to pay for your needs.

Cut back on unnecessary spending

When you have decided on the repayment plan that you will use, it’s time to look at your budget plan. Whatever repayment strategy you’ve chosen should be aligned with your budget plan. To be specific, check your expenses and see how you can increase your debt payment fund significantly. Maybe there are expenses that you can cut back on until the end of the year.

This will involve some sacrifice but it should be worth it if it means getting a huge improvement in your debt situation. It’s only a couple of months anyway. But make sure you don’t make yourself miserable in the process. If you feel miserable, you might end up not completing the program you started. For instance, remember that this period also includes Holidays. So give yourself some budget for that.

Increase your income

If cutting back on expenses is not enough, you should try to increase your income to pay off your debts. This is one of the debt management tips that will proactively help you pay off your debts.

Find a freelancing job that you can work on during your free hours. There are many companies who had to move their business online because of the 2020 coronavirus pandemic. If you have a skill that you can do online, like writing programming, coding, designing – these are skills that you can use online. You can also think of a hobby that you can capitalize on. Maybe you can bake or cook something special that you can sell. If you’re good at carpentry, this is also something that you can earn from.

Anything that you earn on the side can be used to pay off your debts by the end of the year. The more you earn the more you can pay off.

Seek professional advice

The last of the debt management tips you have to learn is to ask for help. In particular, you need to look for a debt expert who can explain to you the options that you have. You can rely on them to guide you throughout the debt relief process. And if you encounter problems with your payments, they can give you the options that will help you recover regardless of what your current situation is.

Sometimes, people who are trying to pay off their debts feel more confident if they know they have someone beside them for support. Unfortunately, some people feel embarrassed to share their debt situation with loved ones and friends. But since a debt expert is a stranger, you can rely on them without worrying that they will judge you. And since it’s their job to help you, they won’t leave you until you’re debt-free.

How to stick to your debt management plans

All these debt management tips should help you achieve complete debt freedom. But since it will take time for you to completely pay off your debts, you need to have a plan to sustain your monthly payments.

Here are some of the things you can do.

Know why you’re doing it

Start by keeping in mind why you’re doing this. This is a powerful motivator. We all know that we have to pay off our debts. In fact, one survey revealed that 51% of respondents want to prioritize paying off their debts.

But why do you have to insist that it should be done by the end of the year? That would mean extra effort. You must have a strong reason to make the sacrifices needed to pay off your debts fast.

Use a budget plan

Another strategy that will make it easier to implement debt management tips is to use a budget plan. If you aligned your debt repayment strategy with your budget plan, you can always ensure that it’ll be funded. To be sure that the funds won’t be compromised, mark it as your priority.

Develop the right habits

It’s easier to maintain your debt management plans if you are implementing the right financial habits. These habits include budgeting, saving, smart spending, and other habits that will improve your finances. Since you are used to these habits, making the right decision about your money will come naturally.

3 Budget Goals That Will Help You Survive The Toughest Financial Crisis

October 2, 2020 By editor

Do you have budget goals? If you don’t (or maybe you have no idea what it means), it’s time for you to understand what it can do for your finances.

Most people would just focus on having a budget plan. They take their net income and monthly expenses. Then they make sure that their expenses do not go beyond their income. That’s what budgeting is all about right?

This is not true. There’s so much more to budgeting than merely keeping track of your expenses. It can do more than just help you regain financial control by helping you monitor your income and expenses.

It can improve your current financial position. It can improve how you manage your finances. But only if you know how to use it correctly. Monitoring your income and expenses will help you make financial decisions. But incorporating budget goals in your monthly plan – that’s how you can bring about real improvement.

This is an important realization, especially during these times. The combined effects of the pandemic and recession have pulled a lot of Americans back financially. Households have suddenly been plunged in more debt. Workers have lost their jobs. Businesses have shut down permanently. People are forced to pay huge amounts of medical bills – at least, those that got sick.

All of these have put household finances in a not so ideal situation. If you want to survive this financial crisis, you have to use your budget plan to help improve your current finances.

3 budget goals you should try to reach during a crisis

Budget goals are specific entries in your budget plan that will focus on areas in your finances that you can improve.

Here are examples of goals that you can put in your budget plan – specifically those that can help you get through this current crisis.

Replenish your emergency funds

Do you think it’s hard to boost your emergency fund during a crisis? It’s not impossible! Just ask 74% of the Millennials who was able to stash a more substantial amount in their emergency fund. You see, when the lockdown and quarantine happened, people were forced to stay at home. Households with families may have spent more on groceries and home-based entertainment – to help keep their kids safe and occupied. But this did not extend to millennials. It seems like a huge portion of their money goes to entertainment expenses. So when the lockdown happened, they were really able to save a lot of money.

Think about that for a second. While you still can, keep strengthening your emergency fund. Because if the crisis continues to get worse, that fund will prove to be very useful in helping you survive.

Admittedly, this will be a hard task. This is why you have to plot it as one of your budget goals. That way, you will consider it a priority in your budget plan.

Keep paying off your debts

Another important budget goal that you need to focus on is your debts. You need to find a way to pay off debt faster. The longer it takes for you to completely pay off your balance, the more you pay towards the interest. This is money that you don’t want to waste on interest. So if you can get rid of your debts, you have to identify this as one of your budget goals.

If you don’t have enough money to pay off your debts, you have to rank it according to priority. On top of the list are the good debts that you have – like your mortgage payments. Next to that are the high-interest rate debts. Your goal here is to avoid wasting money on interest rates. So it’s better to get rid of these high-interest ones first. Only then you can focus on low-interest debts.

You should consider talking to your creditors and lenders to check if you can negotiate your debts. Try to convince them to lower your interest rates or waive some of the fees you have to pay.

Buy the best value for your money

This is not really something that you can put in your budget plan as a specific budget goal. But this is very important if you want to improve your financial situation. This simply means you have to start spending your money wisely.

The truth is, your finances will improve, not because you keep increasing your income. It will improve once you learn how to spend your money wisely. This is why you have to develop the right spending habits. It doesn’t mean you have to buy only whatever is the cheapest. It’s actually more important for you to get whatever will give you the best value for your money.

Sometimes, cheaper is not always better because it doesn’t have the quality that will make it last for a long time. If you have to keep on changing it, that will end up costing you more money in the future.

Scrutinize the expenses that you use in your budget plan. Make sure that all of the expenses you spend on, it has to give you value. If not, change it. Or find a better one.

Tips to help reach your budget goals despite a crisis

Once you have set your budget goals, you’re not yet done. What’s next is hard work. Now it’s time for you to try to reach the goals that you’ve set.

Why is this important? Because you want to be prepared for any event – especially those that will compromise your financial situation. Take a look at current events. If something like this happened again, how will you survive? According to reports, 27 million Americans admitted that they didn’t have enough to eat in the last few days.

That’s how devastating the pandemic and recession is. We all know that something as bad as this event can happen one after the other. You have to make sure you are prepared for the worst-case scenario.

One way to do this is to make sure you stick to your budget goals. Here are tips that will help you do this.

Stick to your monthly budget

The first thing you have to do is to ensure that you stick to your budget plan. No matter how much thought you put into this plan, if you can’t follow it, then there’s no sense in you creating it in the first place. Just follow this plan so you can meet every single goal that you put in there. You have to be disciplined enough to exert the self-control that will make it happen.

Add to your income

Another thing you can do is add to your monthly income. Budget goals usually need to be funded. If you have sufficient income, you can easily save up and reach these goals. But that’s not the only benefit. Adding to your income will also make your finances more secure. This is especially true if you can open a new source of income. When you have more than one source, you won’t stress over the fact that your day job may be in danger. You can lose one source and still have another one coming in.

5 Steps To Start Your Credit Card Debt Recovery Strategy

September 11, 2020 By editor

If you accumulated a lot of balance on your credit cards, you are in dire need of a debt recovery strategy. These credit cards are notorious for having high-interest rates. That means you need to pay off your debts as soon as possible. Prolonging your payments by sticking to the minimum payment will cost you more on the interest amount.

You see the finance charge is usually added to the balance that’s carried over to the next month. This charge is calculated based on your interest rate and current balance. The higher these are, the more you have to pay towards the finance charge. Every time the balance is carried over, you’ll keep paying the finance charge. That’s what makes your credit card debt very expensive.

Don’t wait for it to get worse. Otherwise, you might join the increasing number of people who have entered a “financial hardship” status. This means they are already unable to pay off their debts and they need a reprieve from their payment obligations.

If you want to minimize the interest payment on your credit card balance, you have to try to pay off your balance as quickly as possible. The best way to do this is to come up with a credit card debt recovery strategy.

5 simple steps of a debt recovery strategy

If you want to be successful at something, you have to be prepared with a plan. Having a plan means studying all your options and choosing the right one that suits your current financial situation. This process allows you to find a debt recovery strategy that you can afford.

While there are a lot of options to pay off your credit card debts, they all follow these 5 simple steps.

Step 1: Accept your current financial problem

Do you know why some people fail to get out of debt? Because they haven’t really accepted their financial problem. Sure, they try to deal with their credit issues by paying off their balance. But they’re not really doing anything about why they are landing in the same debt pit time and again! Even if they pay it off, they are still accumulating debt.

So to really deal with your credit card debt, you have to identify and accept the real problem. What is causing you to use your credit cards excessively? If you can’t stop it, you’ll never completely pay off your balance. Because every time you pay, it won’t matter. You’re adding to it anyway.

Make sure you deal with this first. After identifying it, you have to accept the fact that you need to change the habit that’s fueling it.

Step 2: Take account of your finances

The next step to make your debt recovery strategy effective is to take a look at your finances. Your goal is to know how much you can afford to pay towards your debts. This is an important part of your strategy. It will help you identify the type of solution that you can choose. Obviously, you want the repayment plan to be affordable.

For instance, if your income is very limited and you can’t pay off your debts, you need a debt solution that will reduce your monthly payments. It’ll be easier for you to meet the monthly payments that way. If it’s affordable, it won’t be too stressful for you to complete your debt recovery strategy.

Step 3: Outline your objective

It also helps to understand why you are doing this. It will motivate you to completely pay off your debt.

Do you want to complete the debt payments so you can save on your monthly expenses? Or maybe you want to get rid of the stress that comes with having a lot of debts?

There are also people who are driven to get out of debt because they have financial goals. Like they want to buy their own house in the near future. Having a lot of debts will make it harder for them to get the best terms in their interest rates.

Some people just want to be free from the burden of having credit obligations.

What’s important is to know why you want to do this. Because the debt relief journey is not that easy. You’ll face a lot of temptations. You must find a way to overcome these so you can successfully implement your debt recovery strategy.

Step 4: Create a repayment plan

The fourth step is to create a repayment plan. There are a lot of debt relief options that you can choose from. When you reach this step, you already have an idea of your debt situation. You should also know how much you can afford to pay. Now it’s time for you to figure out the best debt relief program that will complement your financial situation.

Like if you want a reduction on your balance, opt for debt settlement. If you want to lower your monthly payments, you can choose a debt consolidation loan or debt management. For those who can afford to pay a lot each month, a balance transfer will help you get out of debt faster and save money too. Especially if you got a 0% interest rate on the balance transfer card.

The important thing is, you consider all your options so you can make informed decisions about your debt situation.

Step 5: Revise as needed

Finally, you have to keep checking your debt relief program to see if it still applies. You see, life constantly changes. Maybe the debt recovery strategy worked at first. But what if something happened to your income?

If you got a raise, you might want to pay more towards your debts so you can get out of debt faster. But if your expenses grew because of some improvements you implemented in your life, then you need a lower monthly payment. That means you might have to change your repayment plan.

Always check your repayment plan if it’s still applicable based on your current financial situation.

2 mindsets to make your debt recovery strategy successful

Admittedly, implementing your debt recovery strategy is tough. This is especially true if you keep on using your credit cards. According to reports, 37% of families rely on their credit cards to pay off their bills. They just deal with the aftermath.

This is a tough situation to be in. if you are forced to use debt to make ends meet, something has to change. Because it’s hard to get out of debt. The more you owe, the harder it is to solve. So make sure you don’t let to reach that point.

And once you’ve decided to solve your debt situation, you need to condition your mindset. Having the right mindset will make the debt recovery strategy easier.

Prioritize expenses

First of all, you have to prioritize your expenses. Sometimes what happens is, you spend your money recklessly after getting your paycheck. But when the time comes for you to pay your bills, you no longer have money left. That’s a problem. You need to know the priority expenses. That way, you can put aside the money for that and it will not be in danger of being spent on something else.

The best way to do this is through your budget plan. Make sure it’s updated and aligned with your repayment plan.

Keep saving

The other mindset you need to have is about saving. You have to get better at saving. It doesn’t matter if it’s a small amount. You need to be cautious about how you use your money. If you don’t need to, don’t spend and just save the money. Anything that you save can be put aside to either help pay off your debts or grow your emergency fund. Both will help make your finances more secure.

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