The golden rules of debt man­age­ment

Finweek English Edition - - MONEY - BY KRISTIA VAN HEER­DEN

Great f i nan­cial habits are cul­ti­vated by mak­ing a few good de­ci­sions ev­ery day. In the past t wo weeks we’ve delved into the some­times ter­ri­fy­ing world of debt. This week, we speak to top cer­ti­fied fi­nan­cial plan­ners and pro­vide a cut-out-and-keep debt cheat sheet. than the in­ter­est re­quired,” he says.

Un­til you’re in the clear, Hewett says you should try to al­lo­cate any spare cash to debt car­ry­ing the high­est rate and the long­est term. It might seem coun­ter­in­tu­itive, but if you are cur­rently sav­ing, he ad­vises you com­pare the in­ter­est you are earn­ing with the in­ter­est you are pay­ing on your debt. If you are pay­ing more in­ter­est on debt than you’re earn­ing on sav­ings, put your sav­ings to­ward pay­ing off debts first. ex­plains. “In­stead, you must first fig­ure out what is caus­ing your debt and why you are spend­ing more than you can af­ford to. The per­ma­nent cure is to iden­tify and end all the ways you are wast­ing money so you never go into debt again.”

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