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How To Manage Your Debts (Tips)

Pretoria – Maybe your great-grandfather lived his life
debt-free, paying cash down for everything, but in
today’s world, that’s an impossible dream.
Very disciplined savers may be able to pay cash for
appliances, but few people can pay cash for
something major like a car, and you’d have to be very
rich to buy your home with cash.
So most of us will live with debt for a significant
portion of our adult lives. Instead of ignoring that fact
of life, we’d do well to manage our debt comfortably.
1. Pay on time and in full, every month.
People who skimp on payments or pay late develop a
bad track record, and a good record is helpful.
2. Ask you bank to renegotiate rates and terms.
With a good credit, you can approach the bank to
renegotiate rates and terms. The interest rates you
pay are not set in stone: there’s a certain flexibility,
and if your bank sees you as creditworthy, it may
reduce the rate you pay.
Renegotiating your interest rate on a long-term debt
such as a home loan is usually a better option than
moving it for a better rate, as there are cash costs
involved in switching from one home loan provider to
3. Pay more when you can afford to.
It brings down your capital debt faster – and it means
that, should you hit a bad patch (if you are
retrenched, for example), you’ll have some wiggle
room and your creditor will be more willing to
reschedule payments to help you through.
4. Save as much as you can.
If we’re not living beyond our means, we tend to live
precisely within them – which is what’s behind the old
saying, “We’re one month away from a disaster.”
If the unspeakable – the impossible – happened right
now and there was no income coming in next month,
how would you cope? A cash cushion that will see
you through three months is the goal to aim for.
Put it in an on-call account where it will earn a small
amount of interest.
If you’ve followed all these tips, you should be able to
avoid sustaining serious losses if and when a crisis
comes along.
If you have to cancel your life insurance policies, for
example, that’s a permanent loss: you will not get
back anything like what you’ve invested in them, and
when you’re in a position to afford insurance once
more, your premium will be higher.
So being canny with managing debt will help you
maintain your lifestyle over the long term.

Also read  How To Avoid Credit Card Scams

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Updated: August 6, 2017 — 3:27 pm

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