Managing Your Loans

If you have incurred a lot of loans under your belt: personal loans, credit card debt, auto loans and even student loans, you’ll want to make sure to manage them well, or risk wrecking your credit by making a late payment somewhere. Your goal should be to cut down on the debt you carry and the key step is to stop borrowing any more money. You need to accept the fact that you must begin to spend less and earn more in order to pay off your debt, and to try to lower your interest rates as much as you can. Being overly worried about debt won’t help; however, here are a few tips to keep your debt under control and ways to speed up the process of reducing your debt load.

1. Keep tabs on your credit

Especially as a result of the Credit Bureau that has been initiated in Jamaica, anyone who borrows money should keep an eye on his or her credit. Sooner or later Jamaicans will realise that in order to access certain benefit(s), having a good credit score will be vital. Essentially all of us will need to know our credit score/rating, and that will say a lot about your debt habits. If you’ve got loans and many accounts you’re dealing with, you’ll need to know how your debt load affects your credit rating. The way you manage your debt influences your credit rating. I will be prudent to have a healthy credit history.

2. Consolidate your loan

You may want to consider consolidating your loans on your own as a way of reducing your debt.

3. Do your own debt management

Before you seek credit counselling or turn to debt settlement companies, do all that you can to handle your debt issues on your own. Handling things on your own is cheaper. A lot of it is simply applying fiscal discipline: start off by avoiding new debt. Don’t take on additional debt unless you are comfortable with what you’re already dealing with. Cut back on spending or try to earn more in order to cover your bills. There’s really no magic bullet here; there’s nothing that others can help you with that you can’t already do on your own.

4. Lower your interest rates

Find out if you can somehow reduce your loan rates. Or you may think about taking out a cheaper personal loan to pay off a more expensive loan. Also, you may be surprised to know that financial institutions may have hardship programmes available and that bankers may be willing to negotiate with borrowers who approach them for guidance. It never hurts to try!

5. Pay on time!

You know you’re in trouble if you’re unable to make your loan payments on time. This indicates that you’ve taken too heavy a load and that you should make it a priority to address this debt. Do your best to cut down on expenses, while paying on time. Pay your bills late and you’ll see your rates go up. Whatever happens, do your best to make those payments because late or missing payments can do more harm and no good.

6. Pay more than what’s required each month

If you ever get a hold of a windfall or find yourself with extra income, you should think about applying it towards your debt. Some people suggest keeping debt around while banking the extra money in an emergency fund, but I think it would depend on just how big a debt obligation you actually face. If debt is a thorn on your side, get rid of it as soon as possible!!

7. Be picky about the help you choose to get

Turning to credit counselling, debt settlement and loan modification offerings should be the last thing you try to do. You can actually do your own debt negotiations yourself by approaching your lenders directly for assistance. Some people decide they need the extra help by reaching out to debt management companies when they feel there’s nowhere else to turn. These companies can help alleviate the pressure