Debt Management This is the part 5 of the series “Masterize in Financial Planning through Football”Here we are discussing about managing one’s debt as the part of personal financial plan as well as some major points to help you to come out of debt and the signs that shows whether a person in a debt trap. Read further….
OK. We are coming back to our football team. Now our football team all set up with 11 key players as well as 3 extra players as backup. It has a very good, carefully selected and experience coach too. The team is now in the ground for a match.It is a truth that if any of the player doing foul and getting a red card, cannot continue to play the game and he has to move out immediately. The result is the team has to play with less number than opponents. Each player to take care to have fair play through out the game or he will be out by red cards. If such happen, the team has to play remaining time without full strength and there is enough chance to a lose.In financial planning, debt management has a considerable role. Any personal financial plan starts with huge debt will be useless. You required a well defined and disciplined action to get out of debt.
Below is the best possible action list to get out from debt at the earliest possible time:
1. Come up with a written plan to reduce your debt systematically.2. Prioritize debt in the sense of high interest to law interest.3. Allocate sufficient money to get out of the debt which has high interest. Example, credit card, personal loan etc..4. Make regular payments.5. Check out all the statements and confirm things are alright.6. Get counseling on debt management from a good organization who provide free training, if required.7. Never, ever try to pay the minimum balance in the case of personal loan and credit card debts.8. Pay more than the minimum balance to get out of dangerous debts first and early.9. Control your un-necessary expenses.10. Control the usage of credit cards.11. Limit the credit card number to one or two.12. Move balances on cards with high interest rates to cards with lower interest rates.13. Use your savings to pay off the debt first. With a huge present debt, saving money is meaningless.14. Remember to NOT apply for new loans
15. Remember to not apply for new Loans or costly debt consolidation methods to come out from the present debt. This will give your more problem than present, in the future.
Points to remember: Creating proper work plan, consolidating your debt, making disciplined action and monitoring the elimination process is the best method to get out of debt as soon as possible.
Here are the warning signs shows a person is in debt trap:
1. There are no savings once after also earning handsome money. 2. The habit of making only minimum payments 3. Making payments using credit cards, may be two or more cards, by not considering existing debt on each. 5. Not a plan to understand how much debt you have 8. Being a liar with friends and family on spending
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