Expert advice on how to manage your finances—now
QI’ve accumulated more debt than I can repay with my current salary and expenses. Should I get a loan to pay it off?
It would be a good idea to talk to your creditors first and present a plan for how you can pay off your existing debt. Negotiate if you can pay it off for a fixed period of time, then see if the creditors, based on their assessment, can waive further interest charges given your current situation. Getting another loan might just place you in a cycle of debt, which you should avoid. While it could consolidate all your debt, the fact that you are incapable of repaying debt with your current salary and expenses will remain a problem.
QHow should I save for my child’s college education? Are there financial products I can consider?
Consider how long you need to save up for it. If you are looking at more than five years, you can consider getting into aggressive or semi-aggressive forms of investments, like equities or balanced funds, and then switching to conservative forms of investment when the target year gets closer. On the other hand, if you have less than five years to save, fixed income instruments could be the better option to avoid the higher risk for loss.
QI use my credit card to cover expenses that my salary can’t cover. How do I break this cycle?
Accumulating debt is a sign that you are living beyond your means. There are two ways to break this cycle: You need to either cut down on expenses or increase your income to fit your lifestyle. Track your daily expenses and cut down on the unnecessary items. Also, look at your monthly bills and see if you can find a way to reduce costs.
You can also find a way to increase your income through a better-paying job or by becoming a part-time entrepreneur, for instance, so that you can fund your desired lifestyle.
QI used to have a mutual fund investment but I withdrew it after I needed the money for an emergency. How do I get back into saving, investing, and maintaining it this time?
Revisit your monthly budget, and start allocating a fixed portion of your income for savings. Prioritize building an emergency fund, which is worth three to six times your monthly expenses. Once that’s established, you can get back into investing without having to worry about pulling out your investments in case of an emergency. Having an emergency fund gives you solid financial ground, which protects the investment for your long-term goals in case of short-term crisis.
Don’t know how to pay off your debt? Try to negotiate a payment plan with your creditor.