5 Effective Debt Management Strategies
Regardless of if you are running a business or your personal life on credit, it’s a balancing act that can make saving for long-term goals difficult. Although there is such a thing as good debt, all financial liabilities require constant attention. This can be draining. For example, if credit debts are not paid in time, interest and fees can add up and contribute to your financial misery. In addition to this, while paying off credit helps improve your credit score, if debts are left unpaid for a long time your credit score will suffer which can make acquiring things like personal loans and mortgages difficult. In this blog post we discuss 5 debt management strategies you can employ to get your credit in check.
Rework Your Budget
Before diving in to attack your debt, it’s always a good idea to re-evaluate your current financial situation holistically. Identify your income sources, variable expenses and fixed costs. Re-evaluating your budget can make it easier to set aside money to pay off your debtors. For example, if you are able to live within the lower margin of your variable expenses, you may free up income that can help you to get your debt under control faster.
Improve Your Cash Flow
Part of reworking your budget involves understanding how much income you have coming in on a consistent basis. If you can improve your cash flow by taking on additional professional responsibilities, performing freelance work or gigs or starting an online business and supplement your existing income it can make paying off your credit far easier. After you have improved your cash flow you can allocate additional funds to credit repayments.
Review and Prioritise Your Debts
It’s best practice to review and prioritise all of your existing liabilities before you start to chip away at paying them back. It’s a good idea to check what fees and interest repayments are required by your debtors and prioritise paying off the debts with the highest associated fees first.
Review Loan Terms and Consider Refinancing
Reviewing the fine print of any outstanding loans you have is a good idea in the current market. Higher-than-ever interest rates can make refinancing attractive. It’s worth investigating other loans on the market and, if you can get a better deal for your credit, refinancing to save money on interest repayments.
If you have have multiple credit providers and are struggling to keep track of where payments must be made, it can help to consolidate your debts into a single provider. This makes it far easier to manage repayments and stay in control of your finances.
Contact Pillar Financial
Call our friendly team on 1300 730 309 or reach out via our contact page for more information.