3 Steps to Start Managing Your Debts

Debt in Singapore has been on a rise, yet an average person in Singapore has a high potential to repay his debts.

In the beginning of 2014, the household debts were 73.3% of the GDP, but moving towards the end of the year, they reached 75.8% in the third quarter. Although, the credit growth has slowed down compared to the past decade, even then, the household debt in Singapore, in second quarter of 2014, was 230% of the household income.

The real problem starts when people tend to forget the amount owed, and don’t take measures to control outstanding liabilities. Eventually, they find themselves in trouble when debt collector singapore agencies come looking for them.

So, it is vital to keep track of your financial status and credit score. But, what if you’ve already lost the track?

Before you stressed out from all those daily reminders made by your debt collector, follow these steps and prepare yourself to repay.  

 

1. Assess Yourself

Begin by writing down the following:

  • The amount owed
  • The name of the creditor
  • The rate of interest

Normally, debtors with high sums to repay don’t bother too much about these things. Instead, they tend to shift the debt burden from one creditor to another. In short, they never tally. Debtors need to learn how to proper manage their finance in order to pay off debts as less stressful as possible.

Finance experts say that people try to avoid the problem and this is the reason they don’t tally the numbers. It’s not a good tactic to convince yourself by avoiding the real problem. Check each and everything you owe, including utility bills, consumer debt, car loan, credit card bills, student loan, and mortgage.

Do the calculation as follows:

  • Calculate the debt on credit cards and/or consumer debts
  • Calculate the amount spent annually on interest
  • Calculate the debt you repay out of your monthly salary

 

2. Identify the Root Cause

If you’re transferring high-interest payments again, before doing it, think about the habits responsible for your current position. It’s crucial to know the root cause of the problem rather than looking for temporary fixes.

Unable to find out where your spending goes? Well, that can happen if you’re the one supporting the entire family. Debt recovery services recommend tracking expenses to identify two things:

  • Your weak points
  • Areas where you can save

Try the old-fashioned way by saving receipts and entering the amount into the spreadsheet.

 

3. Don’t Do It Alone

There is always room for negotiation to repay your debts on extended time. However, do not do it alone. By including family members regarding your issue may open up your options and receive different views. Including them into saving activity will make your job much easier.  If you let the kids take part, chances are, you get fresh ideas for cutting back and set a nice budget.

It’s not advisable to disclose the details on your kids, but you can help them understand the bad effects of spending more than you can. Besides, your kids should learn the difference between wants and needs. So, tell them you cannot buy certain toy or game, because you cannot afford it.