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30 July 2020
If your bills are piling high and you don’t have a clue on how you are going to pay them off, do not fret! Take a deep breath and know that you’re not the only one in the world struggling to clear off debts.
One of the biggest challenges of adulthood is having to manage a looming amount of debt from either your mortgage, car loan, credit cards or any other form of personal loan debts built up over the years. Here are some helpful tips to help you manage your debt situation better:
Organise, organise, and organise!
Mark on a calendar when each bill is due and create a document to keep track of bill payments. Make a list of your debts, including the creditor, total amount of the debt, monthly payment, and due date. Having all your debts in front of you will allow you to see the bigger picture and keep track.
It's important to not just create your list and forget about it. Refer to your debt list periodically, every two weeks or monthly especially as you pay bills. Update your list every few months as the total amount of your debt changes. In fact, seeing your debt reduce on paper will probably motivate you to work harder on being debt free!
You can’t get out of debt if your debt keeps growing. Go over your budget and categorise your spending to see where you’re spending too much money and where you can reduce spending. Some suggestions you can consider are:
Clear High Interest Debts First
More often than not, the real killer in any debt is the interest. Review your bank statements and identify which debts have the highest interest like credit cards and tackle those first — once the high-interest debts are paid off, you’ll have more money to begin making additional payments on other loans.
For credit cards, sticking to the minimum payment will keep your debt level high and it’ll take you a longer time to pay it off. As far as you can, try to pay more than the bare minimum at the end of every month. You’ll be surprised at how far it will go to reduce your debt in the long run.
Consult The Experts
If all else fails and you require professional help, you can always seek the help of the Credit Counselling and Debt Management Agency (AKPK). AKPK is an agency set up by Bank Negara Malaysia to help individuals take control of their financial situation.. They will study your financial position and create a plan that specifically caters to your needs. Additionally, they will also provide advice on prudent financial management so that you won’t fall into another debt trap. Best of all, the services are free.
At the end of the day, being in debt is not necessarily a bad thing. In fact, if you borrow cautiously, it can actually help you increase your financial wealth. That said, poor debt management could land you in financial hardship. Before diving into such considerations, try clearing your debt and make a financial plan first. Don’t run before you can walk is the key here. The goal of taking control of your finances is to increase your cash flow each month. By reducing your debt, you free up space to explore more options to land yourself in a more comfortable situation.
The above articles are intended for informational purposes only. AIA accepts no responsibility for loss, which may arise from reliance on information contained in the articles.