Tips on managing your debts

Oct 19, 2007

WALLET<br><br>Borrowing is not a bad thing and it can be the only way out at some point.

WALLET

Borrowing is not a bad thing and it can be the only way out at some point.

What is important however, after getting into debt, is how you manage it. You can make gains using borrowed money but it calls for financial prudence. Many have lost fortunes because of debt, partly as a result of ignoring the basics.

Here are some tips on how you can manage and lift yourself out of debt.

- Debt has a price.

Before you even make a decision to borrow, you must know that there is a price to pay for borrowing. It is therefore very important for you to know the price and try to minimize the cost.

Debt in most cases attracts interest and you should have it in mind.

To avoid payment of penalties, try to be on schedule with your payment.

- Ability to pay.
Avoid rushing for credit because it is available. You should be able to put yourself on the weighing scale to gauge whether you are able to pay. Do not dare take it, if the assessment is wanting.

- Plan for the unexpected.
There are possibilities that something unplanned could happen and you are not able to pay the money on schedule. Planning for a secondary source of money to finance debt is good practice.

- Borrow only what and when you need.
You may be tempted to bite more than you can chew, otherwise you will choke. Borrow only what you need and at the right time. Avoid borrowing because everyone else is taking loans.

- Do not take more debt to service another.
It is common practice amongst many people to borrow to offset earlier debts. It is literally digging a hole to fill another hole. Do not be caught up in that syndrome.

- Build a relationship with your lender.
Some people part ways with their lenders immediately they get problems with repayments. Keep your lender abreast with your status; they may be a good source of advice for you to get back on track.

Compiled by Peter Kaujju

(adsbygoogle = window.adsbygoogle || []).push({});