As part of a 3-part series, leading online financial services provider, FinChoice, will offer helpful tips and advice on how to manage your monthly expenses as well as debt.
Debt can be a challenging issue to manage and even talk about sometimes. This series will assist you with understanding the pitfalls as well as explain the options available to assist with managing your own debt. FinChoice would like to make sure you know everything you need to know about how to manage your debt.
Healthy budgeting
A healthy approach to budgeting for expenses that include debt repayments is by applying the 50-30-20 rule. This is broken down as follows: 50% of your income should go to needs such as rent, groceries & the minimum debt repayments you may have, 30% should go to wants that are basically optional such as entertainment costs & eating out and 20% of your income should go to savings such as tax free savings or even extra debt repayments as these are considered savings because they save on any future interest owed.
Tracking repayments
Making a monthly spreadsheet sounds unnecessary with all the technology we have these days where we can login and check statements but having a spreadsheet where you input & track your monthly debt repayments assists with giving you a view on how you’re making an impact on the total sum of your debt. Having this view can often be encouraging as it gives you a sense of accomplishment. Keeping an up to date list of all credit providers, payment dates and amounts can make managing your debt feel less overwhelming.
Spending diet
This may seem like a very obvious advice point but many people who are overindebted are prone to compulsive behaviour. It’s important to consciously make lifestyle changes to commit to your debt management process and this commitment includes no impulsive, unplanned spending.
Checking your credit score
Your credit score – a 3-digit number – is generally an indication of whether you are a high or low risk debtor based on your credit activity. Financial institutions such as banks & retail stores use it to determine how much credit you qualify for. It is important to regularly check it, so that you can understand which
factors impact your individual credit score. This allows you to actively manage your debt by taking a focused approach at improving your score. Knowing your credit score also enables you to know which financial services you have access to and what you preliminarily qualify for.
A credit score is negatively affected by late or missed payments on loans, retail accounts and credit cards. To avoid this and improve your score, try to maintain a low balance on credit limits as much as possible and don’t miss payments. Free credit score checks are available and easy to navigate on websites like www.clearscore.com .
These are the tips in the first part of our series on how to manage your debt brought to you by FinChoice. FinChoice. For when you need it. Find out more www.finchoice.mobi
