Everyone gets a little behind on their bills and payments sometimes. However, when you are under a lot of debt, it is important to know how to manage them. Mismanaging your debts can lead to bankruptcy. Following a few tips can help you and improve your money management skills.
Management of debt may not seem like a very important task when the amount of debt is less. But, as your needs grow over time, the burden of debt also grows. Before filing for Bankruptcy in Orlando, speak to an attorney today.
Tips for managing your debt
- Know whom you owe and how much.
The first step is evaluating how much you owe and to whom. Create a list of the different types of debt that appear on your balance sheet. Different debts have different implications on your credit report. Make a list of the following:
- the total amount of debt
- outstanding debts
- monthly installments
- the creditors you owe the sum to
- and the maturity date
You can check this list from time to time to periodically refresh your memory.
- Pay your bills on time every month.
You might not think missing a payment deadline for one month is a big deal. However, when you miss payments, you need to pay late fees as well, which increases your debt. In case you miss two payments in a row, the interest rate on loan also increases.
Today, everything in the world is digitized. If you have a habit of forgetfulness, you can set alerts and reminders for different types of payments in your smartphone calendar. When you get reminded, make the payment as soon as possible.
- Use income from investments.
If you have invested money in mutual funds, stocks, or fixed deposits, it is smart to use the earnings from your investments to pay the EMIs. This will prevent you from buying things you do not need right now and instead divert to clear a debt. If you earn a lot from your investments, you could also make prepayments on loans to make the process faster.
- Have a budget in place.
Having a budget in place can help you significantly in the long run. However, creating a good budget requires a lot of planning and patience. Track your monthly expenses and determine where you can save money. Eliminate the expenses that you consider wasteful or those that do not serve a good purpose in your life.
Set some money aside for your essentials, such as mortgage and utility bills. Remember that you should have money left with you after setting a budget. This extra money goes into your savings account.
