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  • 6 Ways to Lower Your Debt Payments

    Are you bogged down with your debts? Well, you are definitely not alone. A large amount of debt can get overwhelming to manage. If you are looking for a way in which you can start working towards reducing your debt, read on.

    1. Assess how deep you are in your debt

    First and foremost, you need to check the exact amount of how much you owe in order to repay it off. This may include both short- and long-term debts. List out the different creditors that you have and note down the total amount that you need to pay each of them. Also, note down information such as the amount due per month, important dates for repayment, and other details. A detailed credit report also comes in handy during this time. Make sure that you make a note of your credit score on a regular process once you start repaying.

    2. Budget and follow-through

    At the time of repayment, it is important that you plan ahead. Make a budget for your monthly repayments. Keep a note of the amount that you can save each month after expenses for repaying your debts. You can also create a monthly calendar and efficiently pay off debt payments immediately after you receive your salary. You can start with paying off the minimum payments on your credit cards. This shall improve your credit score. With the closing of each debt, you can focus more on larger loans from the succeeding months.

    3. Re-evaluate your lifestyle

    Consider making some changes in your lifestyle and expenses. It is essential that you make a note of the expenses which can be avoided from your end, helping you to save more. This needs a certain amount of discipline and results would only be seen after a certain amount of time has passed. Certain lifestyle alternatives can also be adopted.

    4. Apply for a debt management strategy from a professional

    Once you have taken a stock of the amount of debt you have, you can ask for a debt management strategy from a professional. There are a number of agencies working in this area, who can help in creating a custom solution for you. In Malaysia, you can get support from the Debt Management Programme under Bank Negara Malaysia (BNM). If you have not declared bankruptcy and the total amount of your debt is not more than RM2 million, BNM can provide a personalised debt repayment plan for you.

    5. Use savings and emergency fund and prioritise your debts

    This is the time you can effectively use your savings and emergency stack of cash. The amount of money you have in your liquid assets can help in financing some of the repayments. Smaller loans and interest payments on credit cards can be repaid in this way. With a strategy for debt management in place, you shall be able to figure out which payments to make first.

    You can also use the snowballing method of repayment. With a multiple number of debts which have same due dates for payment, it is suggested that you pay off the smaller dues first and then go for repayment of the larger debts. This shall enable you to tackle your mountain of debt bit by bit, and shall help you in assigning more amounts in the future to pay off larger loans.

    6. Bring your debts together

    When you have multiple sources of small debts, you can bring it together so that you can pay it off in a more effective manner. Suppose you have multiple credit cards with various amounts that need to be repaid. You can opt for a balance transfer facility where you can transfer credit balances from other banks into one particular account at a lower rate of interest. This shall help you to pay off the dues easily.

    You can also consider going for a debt consolidation loan. They help in increasing the debt repayment period and thus, lengthening the period in which the loans are repaid. There is a risk of a higher rate of interest being incurred through this loan. Make sure you do your research properly before going for a debt consolidation loan.

    With these measures, you can pay off your debts slowly and become debt-free. In the future, you can also list out the pros and cons between various personal financing products before getting one.

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