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Axiomatically, it is wholly indubitable that poor loan debt managing practices can have adversative effects on one’s personal finance management. Within a short time, this can easily slip to insolvency and a series of financial obligations that are beyond your reach. Due to the unpredictableness of the future, emergencies are common and may come when you do not have the needed funds to attend to them.
However, one of the insurmountable hurdles that many people encounter when it comes to loan debt is to manage the intricate relationship that exists between their spending behaviors and their appetite for credit. For instance, in case you advance a payday loan, you probably have laid a big trap for your future creditworthiness. Nonpayment can harm your credit score due to imminent and potential default rate arising from its short maturity and repayment period.
Habitually, such lines of credit have eccentric repayment methods that are normally associated with huge servicing costs or interest rates that can surpass the principal amount within days. In this post, Buziness Stretch discusses some of the things you should do to manage your loan debt in 2019 and avoid financial hurdles.
Check on your behavior
The primary reason why you perhaps get trapped and get entangled in a mesh of loan debts relates to one’s spending behavior. Personal finance management is a practice that needs total discipline when it comes to your behavior and how it influences your spending traits. Accordingly, you should scrutinize and scan the type of behavior that drives and motivate you into loan debts as the cardinal step toward your debt management.
Some of the behaviors you should be keen about include avoid carrying by your credit card anyhow. Sagaciously, such behaviour can trigger lure you into impulsive spending that was not planned. Secondly, avoid nurturing your relationship with people using your credit cards and only link with people who helps you to save most in your credit card.
Thirdly, you should curtail your cravings for instant gratifications that can exceed the amount of money you have and hence luring you into huge loan debts. Advisably, you should not avoid the present technology such as swiping and mobile banking but what you should be chary about is to only use it when needed to avoid being fully accessible to you your bank account at any time.
Fourthly, ensure that you always make the minimum payment on your cards, especially the credit cards to avoid exorbitant interest rates charged by banks. Lastly, ensure that you develop a high sense of specificity in behavior when it comes to your spending both in the present and in future.
Rank your loan debts
In case you are already indebted and the loans have been rolled over to 2019, the best thing you can do is to rank your current debts and prioritize them based on their earnestness. With clarity on how much you have and how much you owe each debtor; you can easily work out your repayment plan that will be less strenuous and reduce defaulting on them. You should essentially work out the nature of debts you will settle first based on their interest rates and maturity period.
Recommendable, you should start by settling debts that have the highest interest rates first. Secondly, you can also start by paying off your smallest debt first to develop a sense of accomplishment step-wise. Importantly, whatever the approach you use, you should always strive to avoid late payments as this can increase the servicing costs through extra penalties.
Contemplate refinancing/loan debt consolidation
You may also opt to consolidate or refinance your present debts. In this case, you can either consolidate your current loans into one loan and work out the best way to settle it out. Debt consolidation helps you to combine different loans into one and therefore focus on its repayment other than having multiple debtors.
Restructuring can also work and help you get out of your loan debt. For instance, you can restructure and refinance your current loan debt by getting another loan that has a long maturity date and low interests to pay off the high-interest debts first and avoid defaulting on it.
Nonetheless, failure to regulate your spending behavior can still end up calamitous when using this method to manage your debt in 2019. Only consolidate and refinance your existing loan when you are effusively meticulous about your spending habits lest you broaden the loan even further.
Consider restructuring your current loan debt
Debt restructuring refers to loan management technique that is used by both individual and companies to alter the terms of payments on outstanding debts with the aim of reducing default rate. In case you have one of the reputable lenders, you can approach them to restructure your loan and negotiate a new approach that you will take to pay the loan debt. Practically, this may involve extending your repayment methods and circumventing potential daily penalties that are automatically backdated in case of a default.
Increase your revenue generation activities to settle your loan debt
Lastly, to get out of the loan debt debacle, you should consider increasing revenue stream activities that will help you to raise enough money and meet your obligations timely. Probably, you will have to reconsider cutting back on your expenses as you raise more money to service your outstanding loans in the short run.