Over the past few years while i was earning i have clearly understood what financial management is and how to make money my slave rather than money making me its slave and running into debts.
I have learned a lot from my father as to how i can manage my money and that is really helping me now since i am married and have a kid and a lot of responsibilities to support my family, meet their needs and also to save for my family and for my daughters future and all these things with the income i earn and also pay the bills like premiums, loans etc.
With the experience i have i intended to share my knowledge about managing money as well as managing debt i.e when loans are taken and how to manage to pay them off with the resources i have and also to lead a peaceful, happier and a healthy life.
There is a saying which i heard in my childhood which says "MASTER THE MONEY OTHER WISE IT WILL MASTER YOU AND MAKE YOUR LIKE A MESS"
I would be listing down 10 ways to manage the debt (i.e to pay off loans/borrowing etc) with the resource we have.
1. PRIORITISE THE LOANS WITH HIGHEST RATES: Some loans which we have taken some years back with low interest rates might become high during the course of time and now the rates have become high and it had a impact on your pocket than the home loan you took. So by increasing the tenure of the Home Loan i.e increasing the number of years will reduce the EMI to be paid each month to let you pay off other debts instead.
2. REDUCING THE EXPENSES: There are various ways to cut short the expenses by taking little steps and putting in little effort we can save a lot. It is like this "Where there is a will there is a way". I often heard people saying that i am unable to cut short my expenses but when i observed in their daily routine i saw a lot of opportunity wherein they can cut short the expenses. i also heard people saying this effort does not make any difference and say it is like a drop in a ocean but dear friend each drop being collected over a period of time becomes a sea.
Then how to cut short expenses. The answer is
1. Eat home made food than going out and eating which is healthy and hygienic.
2. car pooling system: While traveling to office share a car by which the expenses can be shared by four instead of one.
3. To show off our status we might take membership in different clubs but seeing the financial constrain we can cancel all the expensive memberships which are not really necessary at the point of time.
4. If it is possible i.e if is not urgent or required then cut out all unnecessary luxurious items.
5. If a purchase can be delayed by a few months then go for it.
6. Cut out all other expenses like mobile bills/ internet charges/ clothes/accessories etc.
3. WHEN IN NEED BORROW FROM FAMILY OR FRIENDS THAN GOING FOR A PERSONAL LOAN: Because of some urgent needs to be met now a days there is a tendency to approach a bank for a personal loan thinking that it can be paid of within a month but if that does not happen due to some reasons we end up paying a lot of interest and we become pressured. instead of that borrow from relatives and friends who probably offer you better rates and more flexibility over payments than any bank and in some case there might not be any interest to be paid (This happens within family members or with close friend group. try identifying these groups and if possible take loans from them).
Always when taking loans on interest from friends/relatives always put down your agreement in writing so that both the parties are clear on the terms of loan and which will protect your friendship or relation.
4. MIGRATION/SWITCHING TO A LOW INTEREST LOAN: The one advantage with the revolution in banking system is that now we have a lot of options to choose a bank and take a loan and also now since this revolution has happened there is no need for a person to go to a bank and wait for days to get a loan sanctioned but now banks are coming to our door steps to offer loans and also with lot of options which is a big advantage. And in the recent past in the loans sector there has come this feature to switch your existing loans to a bank which offer low interest rates.
1. Try to migrate to a bank which offers low interest rate for a particular loan by paying some nominal charges rather than ending up paying a huge sum as interest.
2. Always try to make your credit card payment in time rather than making a minimum payment also if you are unable to make there is an option of balance transfer. your credit card purchases should not be made if you are forced to do this.
3. see if you can move to a personal loan with a lower interest rate than the interest you are paying for a loan.
4. You can take a loan against a fixed deposit or other investments such as LIC Polices, Mutual Funds, UTI funds etc from the bank.
5. INCREASE PAYMENTS: The money which is saved by cutting the expenses and by saving from the bonuses or working overtime etc to pay the EMI and to make any other prepayments.
6. ASK FOR LOWER RATE: Based on the transactions and credit record being good even though Banks and other lenders are not keen on giving lower rates but still it works out if you could try negotiating with them.
7. LIFE INSURANCE: If you have some LIC policies you have an option of taking a loan at a relatively low interest rate than other banks and financial institutions. Also there is no obligation to pay it back, but if the insured person dies the insurance company will deduct your loan amount as well as the interest value from the sum insured. so please make sure you pay it back so the the nominee can reap the full benefits.
8. PLAN AHEAD: For every thing we plan a lot and when it comes to money we should be wise and plan well. To pay off a large debt it will take years but if we plan well and have some chunks of saving it is better to use the returns on those savings to pay off the loans.
9. REORGANISE YOUR PAYMENTS: We all expect to grow and also we expect our income to grow and if you expect a rise in your income reasonable in the future, organise your payment so that yo pay less now and more later when you are in a position to afford.
10. DIP INTO YOUR SAVINGS: This should be your last resort or your last option where you don't find any of the above mentioned options which can be a rare one. By comparing the interest rates you are making on your savings with the interest you are paying on your outstanding debts. reduce your saving and pay off the debts. Dipping into your savings could be a viable option to stop the debt monster from increasing.
Hope this resource will help you
|Author: Mohan 17 Sep 2009 Member Level: Silver Points : 2|
|YES Thanks for the Information . this is really help to improve my self in all aspects . I am having some tips to get consolidation loans. If possible please use my resource too . Actually this is very much interested really help.|
|Author: aliya 17 Sep 2009 Member Level: Silver Points : 1|
|well, this is a beautiful and informative article and should me read by everybody, when i read the title i thought it would be some bookish tips, but when i read , i think the person has really practically facing as we do, very easy to understand, thanks.|
|Author: Mohan 14 Dec 2009 Member Level: Silver Points : 2|
|Hi Recently I found one great resource for Educational loans . I totally forget to mentioning to you . Sorry for the delay . And this site having useful tips for how to get consolidation loans at your area. Hope this is useful for every loan seeking peoples. don't forget to comment the details ..|
the link is : Student debt consolidation loans and Student loans consolidation