There is a thin line between ‘credit’ and ‘debt’ and the last few years have clearly demonstrated just how easy it is to fall from one to the other. Many people today have some form of debt, whether that might be a mortgage, a loan, credit cards or simply the use of an overdraft facility. In fact, although previous generations saw ‘debt’ as the road to some kind of Dickensian ruin, today our society runs on the idea of financing in order to consume.
So ‘debt management’ is an important part of everyday financial planning for many people, indeed some of the wealthiest people in the country are those with the biggest mortgages and even the debt of the country as a whole is never far from the news headlines.
So here are a few simple and easy ways that everybody can try to take more control over their own debts:
Obviously, if you can avoid going into debt in the first place then that saves having to pay interest on borrowed money, saving you pounds in the long run. This can even apply to things like paying utility bills on time, which can save on late payment charges. Paying off credit card bills in full each month is also essential, providing you are able to do so.
The largest debt many people have is their mortgage and it is a great idea to make overpayments if you can. The historically low interest rates of recent years actually meant some people’s mortgage repayments fell enough so they could overpay. As the interest is calculated on the amount outstanding, the quicker you can pay capital amounts off the less you pay over the lifetime of the mortgage itself.
If you are servicing debts it may sound strange to say you should also be putting money aside as savings, but this can be an essential part of a personal financial plan that can help you avoid building up any more debit in the future. Online advice on your savings can point you in the right direction so that you can be armed with all the information you need to make the best decisions.
Because many of us have several different debts, possibly from having two or more credit cards, store accounts or other loans, it can often lead to a confusing situation. To lessen the chances of missing payments and to take advantage of lower interest rates deals it is a good idea to look into the possibility of consolidating various amounts under one umbrella deal.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.