There was a time when people were prudent with money and would save up before buying expensive items. That was the era when loans and credit cards were unheard of. Things have changed and how! These days, it is simple to avail credit from banks and buy things that are otherwise beyond your means. Whether you want to buy a house in the suburbs or a fancy new car, you can avail loans to live the life of your dreams. You can even apply for a student loan to pay for college and follow your desired career path.

Loans and credit have become so easily accessible that it is not difficult to go overboard with them. If you are not careful, you may find yourself under a pile of debt even before you know it. Missing your last payment dates can wreck your credit score and jeopardize your prospects of taking credit in the future.

Here are a few tips that can help you to manage your debt more effectively. You can also follow these ideas if you are already under considerable debt and are finding it difficult to repay the loans. The goal, in this case, must be to not borrow any more money and reduce your financial obligations.


Calculate your debt

It may seem like a daunting task but it is difficult to fight your enemy until you know its strength. Pull out all your credit card bills and outstanding loans figures. Calculate your total debt so that you can make a monthly plan to repay the bank. A lot of people do not realize that their credit behaviour gets recorded in their credit reports. Every missed payment and every application for fresh credit gets recorded in the report. The more instances that you have of these, the lower your rating gets. A good credit rating can give you the benefit of cheaper loans. You can negotiate with the bank to lower your interest rates and repay your loans faster.

Make a monthly plan to pay on time

Once you have calculated your debt, it is easier to work out your monthly expenses. The ideal way is to prepare a budget to keep your expenses in check. You may have to curb your shopping instincts for some time. You may even have to steer clear from using your credit cards until the situation improves. The most important step is to pay your EMIs and credit card bills on time. Late payment will not only impact your credit rating but also attract more interest and late payment fees.

Try to pay more

Interest rate can compound your debt by manifolds over the years. The best way to avoid this is by paying more than required every month. If you get any unexpected gains or make extra income, use it to repay your current obligations.

Consolidate your loans

If you are struggling to keep up with several loans and their last payment dates, this is an easy way to keep a tab on them. You can consolidate all your loans into a single larger loan and pay off your other debts. Loan consolidation is more effective if you get a lower interest rate and reduce your overall burden. However, in certain cases, you may want to opt for a longer loan tenure to make the EMIs more manageable.

Lower your interest rates


Now, this is something that may not work out but there is no harm in trying. Right? Check with your bank if they can qualify you for a cheaper credit card. Or if they can lower the interest rates of your loan. Certain lending institutions have hardship programs to help borrowers. Your credit score can play an important role in this decision.

Use credit counselling as the last resort


There are several debt management firms out there that may help you in this regard. However, offloading your work to another person is going to cost you money. It is advisable to negotiate your debt on your own. You can instead approach non-profit outfits if you are struggling to keep up with it.

With these tips and information, you can easily manage your debt on your own. The key is to stay determined during the course and not apply for any fresh credit.