6 Tips and Strategies on Dealing With Debt

Debt generally refers to a sum of money you owe to someone be it a friend of you, a bank or a moneylender. From amounts owed on credit cards and mortgages to car loans and everything in between, debt has become an essential part of most of our lives.

According to research, almost 65 % of our population lives with debt, it may be a personal loan, a car loan, a home loan or owing money through a credit card. The wide availability of loans these days and hence people finding it easier to borrow money online to fulfill their requirements are one of the reasons behind this. But, one thing that might surprise you is that debt doesn't have to be a bad thing — taking out certain sorts of loans for certain purchases may actually help to maintain your credit and act as an investment opportunity. But, also can be a huge financial commitment that not only does it affect your current budget, but also your savings for the future if you don't take it seriously and manage it responsibly.

Debts allow us to achieve our goals in the most comfortable way ever, to meet medical emergencies, get high education, purchase property or start our own business. Though they are considered bad, when managed properly they can bring a great difference in once finances, if not managed well, they will come back haunting us. A well-managed debt is vital and makes our life much easier and can even become the stepping stone of one’s life. However, being in debt is not a big deal for anyone who has a stable cash flow. But our progress can be hundred if we are incapable to manage the same and become for sure a stumbling block.

Here are some simple tips for those who are struggling with debt, they will help you to manage your debts better. 

1. Understand your debt

Start by assessing what you have to pay out as essential costs and the money you have coming in each month. Be aware of the different amounts of debt you have, as well as the interest rates for each one. Plan to complete at least the minimum payment on each debt every month. A common method of figuring out how to budget is the 50-30-20 rule, which suggests that you spend 20% of your income on savings or debts, 30% on wants and 50% on needs.

2. Don’t forget to save

Try your best not to ignore your emergency savings account. Having savings will help you pay for unanticipated costs, which will help you avoid getting into more and more debt. Look for expenses that you are capable to cut out of your monthly budget. Even cutting an unnecessary cost of just $30 out of your budget can lead to savings of $360 for the year.

Some simple suggestions on things to cut out might include a box subscription, your cable package or work lunches. It's one of the best money management tips you can use to make saving easier.

3. Create a plan

Creating a Debt Management Plan is a great option - a program that helps you manage overwhelming bills and assemble your non-priority debts into one affordable payment, so you can take control of your debt.

4. Try a Debt Snowball Method

One of the fastest ways to get rid of debt is by making minimum payments from your monthly debt payment fund to all but one of your debts. This specific one will get more than the monthly required amount and will be paid off quicker as a result. When it's paid off, you choose another one and reallocate all of the extra funds toward it. Keep repeating this method until all debts are repaid in full.

More details about Snowball Method: CFI resources

5. Podcasts

Whether you have a ten-minute- or one-hour commute each morning and afternoon, you might find some great podcasts and audiobooks to help you decide on your best debt management method while you walk to work or drive. I propose you listen to different podcasters and not just one, with several sources you can quickly learn more.

6. Above all, seek advice. It is really important to always remember that you are not alone in this situation.