It is easy to get into debt, but hard to get out from it. So, don’t let yourself have a chance to trap into it, else you need a lot of efforts and times to restore a debt free life. The most effective way to avoid any future debt problems is to learn how to manage your money. With a proper money management, you are in control on where and how your hard-earned money goes. In fact, you don’t need a complicated money management system, as long as you are able to manage it in a sensible way, a simple money management strategy will do the job. Follow the 5 easy to implement debt management tips to get a start:
1. Make use of the advantage of online banking
We live in an enhanced internet/online technology world where almost everything can be done online. Most banks have provided online banking facilities to their clients that include online bill payments. So, you should make use of the advantage of online banking bill payment facility to do as much of your debt management online as possible. With online banking, you don’t have to waste your time to queue at bank, or reach the bank within its business hours. Everything can be done from your computer, 24-hours a day and 7 days a week. It provides the flexibility and convenient for you to manage your bills online.
2. Limit the number of bills through debt consolidation
The key factor that causes the debt problem is unmanaged multiple bills. Therefore, limit the number of bills will help you manage your debt more effectively. If you have a number of credit card with balances and ongoing loan repayments, debt consolidation into a consolidation loan helps combine these bills into a single monthly payment for ease of debt management.
3. Use automated payment system
In order to make your debt management process much easier, you can choose to make the monthly payments via automated payment system. Most banks do provide automated payment system via online banking, you can set standing instructions to authorize your creditors to auto deduct the monthly payment from your account. It makes easy for you as you don’t have to remember the due date of each payment, everything can be done by the automated payment system. You just need to make sure your account has sufficient fund to be auto paid to your creditors.
4. Don’t have too many bank accounts
Most people have more than one bank account. You may want to manage your money with different bank accounts, but don’t have too many of them as it may cause you to have problem tracking it and you are unable to manage your money effectively. Moreover, having too many bank accounts also means you need to pay more fees to maintain these accounts. Therefore, just keep the minimum number of bank accounts for effective money management.
5. Save an emergency fund
Sometimes, things not go as we wish. Unforeseen circumstances like major critical illnesses may hit us or our loved ones any time. You will need urgent money when it hits you. If you don’t have savings in your bank accounts, you may need to pay the bills with credit cards, by getting high interest rate quick loan or by withdrawing cash advances. Using the money you don’t own to pay the bills may lead you to a debt problem. Therefore, it is important for you to save an emergency fund to be used when urgent cash is needed.