Taking out credit such as loans and credit cards can be far too easy, but repaying the debt becomes challenging as the interests build up over time. This article will guide you through a basic debt management plan.
Are you neck-deep in debt right now? Nothing else you do gets your complete attention because a part of your mind is continuously thinking of your outstanding debts.
Many agencies out there can create a plan, but you want to save as much money as you can. If this is your situation, then you need a debt management plan right now. So, roll up your sleeves and follow these steps, to get back control of your life!

The first step is to create a list. Microsoft Excel can be a powerful tool for this task. Write down all the money you owe; credit cards, car loans, student loans, medical expenses, etc. Once it’s done note the name of the lender, outstanding amount, interest rate, and the minimum monthly repayment amount.
Now, rank them by order of priority. You can either try from highest to lowest or vice versa. It’s your call, but following that list is a must. However, it’s our view that it’s better to prioritise the debts which have higher interest rates. Next step is to mark the loan you first want to pay off and start working on repaying it.

After the royal commission into irresponsible lending, if not before for most larger financial institutions, your creditors now have dedicated teams you may contact to discuss your financial hardship.
They can often provide you with reduced interest rates, interest freezes and even a moratorium on your required minimum monthly repayments for a short period of 3 to 6 months. Being honest and truthful will often provide you with the best outcomes.

With a revised list of outstanding debts and potential interest freezes in place, you can classify loans by putting small balance loans and high-interest rate loans separately.
It’s upon you where you start. When you start from the lowest, you start noticing faster results with respect to closing accounts as you work your way up. However, the interest on other loans keeps growing.
In contrast, when you start paying the high-interest loans first, you’re saving up the money on interest. The downside is, it will take more time to pay off a debt ultimately. If you get easily demotivated, don’t start with high-interest loans.
Regardless of how you choose to pay, keep the “one at a time” policy intact— focus on paying one debt at a time and stay persistent.

While you’re paying off the debts, there are two things to hold on to tightly.

1. No more loans or credit.
2. Earn extra income.

Getting a loan to pay off another debt is a terrible plan, even if you take a loan at a low-interest rate. This plan might speed up the whole paying-off process but will cost you a lot in the long run, notwhistanding the increased risk.
To speed up the process, you can start bringing in extra money. Either you get an second part-time job, start doing overtime at your office, sell pre-loved items you have around the house or in the garage to get extra money and pay off the debts. You should also cut out needless expenses, such as Uber Eats, as much as you can.
Moreover, keep a regular check on your financial credit reports. Check for any inaccuracies related to debts you do not recognise, irregular payment history or such. If you find any error, contact the related credit bureau agency ASAP and file a dispute.

Living a happy life is difficult when you are constantly worrying about debts. So, pause the extravagance for a short while, create a smart plan, go the extra mile and pay off your debts for a peaceful life.