Lack of debt management may eat up a major part of your paycheck. You may end up borrowing fresh loans to pay off older loans. If it gets out of control, then you may fall in a vicious debt trap. Your critical life goals may get sidelined and even your retirement may get delayed.
Strategising your debt payment may keep you away from such troubles. All you need is being informed about how much you owe to whom. Chalk out a schedule to pay them off. In case you have a lot of debt to shoulder, start paying off the most expensive one first.
In fact, credit cards are the most expensive form of debts. As soon as your salary gets credited each month, pay off your credit card balances in full. Don’t fall for the lure of paying off the minimum balance. Even before you know, the interest will spiral up to eat out all your savings. Make it a point to use the credit card only in case of emergency.
Always keep debt as the last resort. As far as possible, make down payments for your purchases. In case you are shouldering big-ticket loans, look for balance transfer option. You can transfer your loan to another bank offering a lesser rate of interest. This method helps you save a lot of money going out as interest.
Never borrow for assets which are depreciating. Additionally, tax-inefficient loans like personal loans should be avoided as far as possible. You can think of saving and building a corpus to fulfill your goals. In this way, you can avoid falling into debt trap.
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