Reducing your Personal Debt

By: MONEY 101

There are a number of reasons you’d want to reduce your personal debt. For example, you might just want to clear your debts more quickly – or you might actually be struggling to afford your payments each month.

Either way, you need to find a way to reduce your personal debt that suits your circumstances. Here are some tips to lower – or even clear – your personal debt.

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You want to reduce your debts more quickly

Yes, you might be perfectly able to afford your monthly debt repayments along with all your essential expenses (like your mortgage, bills and food). You might, however, want to clear your debts more quickly – or simplify the repayment process.

Slogging away at your debts each month and seeing them only slightly decrease can be really demotivating. That’s why it will help to pay more than the minimum payment – if you can. It’s important to note that you shouldn’t compromise your essential expenses to pay your unsecured debts off more quickly.

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Debt consolidation

You might also find it hard to reduce your personal debts more quickly if you have several different payments to make each month to different lenders.

You could make the repayment process simpler (but not necessarily more affordable) by combining all of your debts together into a single debt. You can do this by using a debt consolidation loan. When looking for a debt consolidation loan, it helps to find one with a lower interest rate than all of your other debts, as well as being large enough to cover all of the debts you want to consolidate.

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Pay off all of your current debts with your consolidation loan and you’ll be left with just the consolidation loan to repay each month. So it’ll just be one payment to one lender, with one interest rate.

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You may even have the choice to arrange to repay your consolidation loan slightly faster or slower than your original debts. This will mean that your monthly payments will be either larger or smaller respectively. Remember that repaying a consolidation loan over a longer amount of time will give interest more time to grow – and that you could be putting your property at risk if you secure a debt against your house and don’t keep up with repayments.

You can’t afford your monthly repayments

If – no matter how much you budget, scrimp and scrape – you can no longer meet your monthly debt repayments, ..

... You’ll probably need expert debt help.

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There are a number of different debt solutions available – some of which can actually write off a portion of your debts. You have to find the one that’s right for you, though. Contacting a qualified debt adviser should help you to get on the right track towards clearing your problem debts.

Dont just ignore your debt problems - with a plan and someone to help and assist, you can get on top of this. There are advisors nationally who will guide and assist you, your family and or your business.  Just ask.

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Tips on how to save

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CALL 78-99-0-99 (metro manila area) (+632 78.99.0.99) outside manila.

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Modern technology helps us spend our money more easily, thanks to the instant gratification credit and EFTPOS systems facilitate. If you need to do the opposite: spend less or save, then some good old-fashioned money-saving tips might work for you.

I've trawled back to find some of the best tried and tested money management skills that should be revived. Granny managed money a hundred times better than any of her grandchildren by taking this approach:

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Spend only cash

Yes. Try a week or even a month without your credit or EFTPOS cards. Pay everything in cash and know that you've not gone into debt at the end of the month. Or if you've got direct debits set up for your rent and utilities bills and don't want to cancel them, you may want to spend cash only for non-essentials.

Put your change in a jar or even a piggy bank

At the end of each day empty the coins out of your pocket or purse and drop them in your see-through jar or piggy bank. Or give something up, such as cigarettes, wine, or even buying magazines, and put the money you would have spent in your jar and watch how quickly your jar fills with coins and the folding stuff.

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Use envelope budgeting

In the old days people received their pay in cash. Good money managers would then split it into envelopes for things like rent, mortgage, groceries, public transport or car expenses, saving and so on. There's nothing stopping us withdrawing our cash as suggested in tip number one, and splitting it into envelopes. Once each envelope is empty you know that you've spent all you can on that category and that any more expenses will have to wait until next pay. Make sure one of your envelopes has the following word on it: savings.

Go back to basics with your shopping

You don't need Mr Muscle or that fancy shower cleaner. There's no cleaning job that can't be done with baking soda, vinegar, methylated spirits, washing soda, or a combination of the above. Likewise, bypass any processed food in the supermarket. Our grandparents ate meat, vegetables, potatoes and bread back in the 1950s and were mostly healthier for it. Allow yourself just one luxury a week such as: ground coffee, muesli bars, Coca-Cola or juice, individually wrapped anything, boutique breads and so on. Not all of them.

Do your banking in person

If you've overspent it's all too easy to go online and move money from one account to another. If you have to go to the bank to do it, you might think twice.

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Budget

Oh yes. Find out how much you're over spending by and work out how much that works out per day. If you're over spending $2000(P100,000) a year that's $5.48(Approx P250) a day. There would be very few people that couldn't cut that out of their spending if they were honest with themselves. Then make a decision that will increase your income and you'll soon be saving not heading for financial Armageddon.

Be sustainable

Granny reduced, reused, and recycled without even thinking of her environmental impact. She made things last longer — even things that we consider to be disposable such as zip-lock bags. She even darned socks to give them another year's life out of them.

If you have no discipline you need radical changes to your approach to money management and granny's tried and tested ways might be the answer. There is no magic formula. You need to reach into yourself to make those changes.

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