Debt in itself is not evil. It can be a great boon to your finances. It is the managing of debt that decides how the cookie crumbles. Credit card bills and loans are two of the most common debts. Managing them well will help you have the best of both worlds. But if you falter, it can lead to a disastrous financial spiral. Knowing about this will help you avoid any financial difficulty. Today, we shall learn about managing your loans and credit card expenses effectively.
Ways to Manage your Loans and Credit Card Bills
To clear your outstanding loans and credit bills, you must plan effectively. This plan centers on the factors like savings, spending habits, and debt elimination strategy. If you master all three, you will master your debts. We have some tips to aid you in this.
Formulate a plan
Quantifying your expenses is the first step towards financial discipline. You should invest time and effort in making the right financial plan. You have to start by making your monthly budget. It should be like a blueprint for all your expenses and investments. This budget should include your monthly amount. Allot the amounts in advance so that you know your limits of finances. First, cover the aspects of your finances like your rent and bills. You can then check out livelihood expenses and ensure you don’t overreach your budget.
Give priority to your credit card bills and loan EMIs while making the budget. They should be non-negotiable elements of your plan. Subtract the amount you owe for EMIs and credit card bills, and then start working on the other expenses. It will help you to get rid of your debt very soon.
Plan out your loan
Before taking a loan, ensure that you have exhausted all other options. The loan you take should be one that you can afford. Take the help of various loan EMI calculators and research interest rates to find the best possible option. You should calculate your monthly expenses and see if you can afford the EMIs. Select the most appropriate tenure for loan repayment. While choosing, you should consider the interest rate and EMIs. Don’t go for a low-interest rate where you might have to pay higher EMIs every month or vice versa.
Map out your spending
You should keep regular track of your spending habits. Making a plan is not enough. You should consistently follow up on it. Sticking to it is the important part. You should check your monthly transaction statements to figure out where you are spending unnecessarily. Make the required budget cuts and maintain the consistency of following them. In this manner, you will be able to control your shopping impulses. It might seem a little difficult, but you will thank yourself later when you reap the benefits.
Investments and Savings
Many people think that one cannot save money when they are in debt. It is just not true. Even with regular loan EMI and credit card bill pay, you should have some money to put into savings and investments. You should find the most beneficial savings scheme and investment opportunities to utilize your funds. You can start small but remain consistent. Compounding is the best way to build wealth. With the right savings and investments, you can build capital that might even help get rid of your loans.
Decide upon a percentage of your monthly income to be used for savings and investments. Stay disciplined, and you will find yourself in profit.
Common billing schedule
One way to ensure you don’t miss out on your monthly bill payments is to align your billing schedule. You can contact your respective bank and pick a date to pay the monthly bills. You can align loan EMIs, advantages of credit card bills, and any other debts you have on one single date. It will grant you ease of payment where you don’t have to worry about ten different dates to pay your bills. Banks are more than considerate to give you the schedule of your choosing. The chosen date should be close to the day you get your salary/monthly income. Once you get paid, you should disperse your payments to pay your bills as soon as possible.
Also Read: What is a Secured Credit Card?
Look out for discounts and rewards
Banks give your good discounts and offers if you are a responsible customer. You should actively look out for such offers. Many people miss out on them out of sheer ignorance. Using them wisely will save you a lot of extra bucks. This money will help you with your bill payments and savings. Banks also tell you the ways to get such offers. See if it aligns with your expenses and use them accordingly. Using the right card for the right purchase at the right time can go a long way in building your finances.