Nevertheless before going into a small amount of manageable debt, one has to keep reminding oneself of certain important facts and knowledge that would guide the debtor safely out of debt in a considerably short period of time. One should also not forget the presence of various debt cure programs like debt settlement, debt consolidation, credit counseling etc, at relevant circumstances, as these debt relief options play a great role in making people debt free in an organized and legal manner. There are many cases where debtors have fallen into bad debt traps or have defaulted, when they could use the same fund much more wisely in other avenues. Thus few facts are necessary to keep in mind while handling debts that can assure financial up-gradation of the debtor.
- First and foremost, one should never get into any debts beyond means, as this wrong strategy rarely pays off. Depending upon your net income, the depth of debt should be decided, which can ensure that you can pay it off according to your convenience without harming your credit score. Keeping your initial debt less than your total of 3 months’ salary is a good rule of thumb for proper debt management. It suggests that your debt would not get over your head and would enable you to leverage your resources with the help of it.
- Secondly never go overboard with your credit card spending or loan borrowings as these are anything but free money. The high interest rates of almost 30% will cut through your neck at the time when you’ll find your debts increased manifold due to addition of interest rates and other fees and charges. Thus remember to use your credit cards and loans wisely to leverage your debt to start making money from it in future.
- Lastly, it is most crucial to ensure that you are capable of making timely and regular payment to avoid harming your credit scoring. It is always advisable to keep aside your six months’ salary in a savings account in times of any financial crisis and deficiencies. Next, one should always consider the other passive and alternative sources of income as well before going into any debt as the same can provide as a safety valve when you would need to repay any bill or outstanding.
Therefore going into a wise and financially promising debt would require a debtor to keep these considerations in mind to get the best out of this deal by following proper debt management skills. One needs to remember the right value and returns of his/her money so that it never falls short of use. Assess all the financial avenues and sources before indulging into any debt to assure a financially independent future.
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