What to do when you are in debt…

When you are in debt?

Financial experts say racking up a big debt does not take much effort or time.
It may seem like it is you against the world sometimes when it comes to dealing with personal finance.
Depending on how deep the problem is, the journey to get back on your feet may be painful and long.

For those trapped in a debt spiral, here are eight steps you can take.

  1. Resist buying something just because it is on sale if what is on sale is not something that you need. Buying something that you do not really need is a waste of money, no matter how much of a discount you are able to get. So, try to resist the temptation of a big sales sign.
  2. To improve your personal finance habits, try to organize your billing cycles so that multiple bills such as credit card payments, loan payments, or other utilities are not due at the same time as one another. This can help you to avoid late payment fees and other missed payment penalties.
  3. Pay off your high interest credit cards first. Come up with a plan for how much money you can put towards your credit card debt each month. In addition to making the minimum payments on all your cards, throw the rest of your budgeted amount at the card with the highest balance. Then move on to the next highest balance and so on.
  4. Pay off your high interest credit cards first. Come up with a plan for how much money you can put towards your credit card debt each month. In addition to making the minimum payments on all your cards, throw the rest of your budgeted amount at the card with the highest balance. Then move on to the next highest balance and so on.
  5. It is very important to set goals and stick with them. Don’t just budget! Automatically make your savings your top priority. Once you save and are committed to doing so, you can make sure that you save even when the money is hard to come by. What a principle to consider!
  6. Even small things can make a difference in your personal finances. Giving up your morning coffee, daily candy bar or even soda can add up over the year. You could be saving $300 a year with a simple change. The money you need for major investments or retirement planning is already in your budget, waiting for you to pull it together from such minor cutbacks. Those things are more important than an expensive cup of morning coffee.
  7. Put money in a separate account to save for big purchases. When you set your sights on that flat-screen t.v., an expensive pair of shoes or a much-needed purchase such as a new refrigerator, using credit to buy it is always tempting. In the current economy, though, racking up more debt is something to avoid at all costs. Set up a new bank account, preferably one that is harder to get money out of, and have a set amount automatically transferred into it each month.
  8. Last But Least, Do not, if at all possible, spend more money than you make. Obviously, situations arise, and sometimes it is alright to borrow money. However, it is important to live below your means. Sacrifice a little now, and later you will reap greater benefits than you can imagine.
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2018-01-23T18:56:58+00:00

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