Debts remind me of rabbits, they have an uncanny ability to multiply in the background and next thing you know they are over the top, completely out of control, affecting almost every aspect of your life. Putting some checks into place in your financial life can ensure that your debts do not start controlling your life.
Do not rely on lenders to determine how much you can afford to borrow – do the maths yourself. It is best to borrow conservatively especially where the loan is applied to lifestyle rather than an income producing asset.
You can get credit cards, personal loans, home loans and more …lenders are in the business of lending money, and they will try to load you up to the maximum. Keep in mind that debt needs to be repaid and reduced – the faster the better. Even if you are offered an opportunity to pay interest only, if you have the money pay down the debt. While priority should be given to reducing the more expensive debt which is not tax deductible, all debt should be reduced by as much as possible.
Paying debts on time is important as not doing so can affect your credit report and ability to borrow in the future. t can furthermore affect the interest rates that you will be charged for future loans. Protect your credit standing and your debt will cost you less.
Acting as a guarantor for the loan of another person makes you financially responsible for their debt. If they fail to pay, the obligation moves on to you. No one cares if you are no longer friends with the borrower and do not keep in contact. If you fail to maintain your obligations to the lender, your credit history will be damaged.
Loans that are on offer in the marketplace change all the time as do interest rates, loan features etc. Make it your business to know what is available and refinance current debts to a better deal if one becomes available. Better deals are available not only for home loans but also car finance, credit cards etc. Remember, any money that you manage to save on your debt costs is actually a tax free gain to your bottom line. In that way you gain more by saving $1000 than by earning $1000. In the former, you keep the savings in the later, you will pay tax first before keeping the balance.
People who are hesitant to put in some time into getting a better deal on their finances are missing out significantly. It is definitely time well spent.