Having a debt is undoubtedly a discomforting situation, but in some cases, they are a vital part of growth. You may need a debt to start your business or purchase an important asset such as a bus or caravan. Whatever the case, saying no to debts can be unreasonable. So what’s the alternative?
Proper debt management. Since we can’t really stay away from loans, then learning to manage the debts should be amongst the first skills we learn. Unfortunately, this is not the case. So if you really want to get your financial life in order, here are some expert tips you can go for.
Prioritise your debts
If you feel that you’ve got a problem, or your credit report shows constant missed payments, then you’ll have to first prioritise your debts. Always prioritise the payments that keep a roof over your head, for instance, your rent or mortgage. You really don’t want to risk repossession of your home.
Also prioritise your utility bills, CCJs and even council tax as they can have a really huge impact on your credit report if you don’t pay them promptly.
Pay off the higher interest rates first
If you’ve got multiple loans, then you should think of paying the ones with the highest rates first. The reason behind this is simple. For starters, that would boost your score and lead to lesser payments in the long term.
However, remember not to break any terms and conditions. For instance, there’s normally a minimum you have to pay for credit cards even if they’re not among your priority.
Pay in time
In some cases, you may stumble upon a huge income source at once. For such cases, remember to pay all the remaining debt if you can. This is particularly important if you’re on a logbook loan. With logbook loans, a complete payment before the end of the loan period can save you up to 190% of the amount you were to pay.