September 4, 2023
Debt often makes our financial situation unstable. Especially if the debt has accumulated. On the one hand, this seems to be detrimental. But on the other hand, we owe also because of a need that we must immediately meet.
Nevertheless, a person who owes no need to wait until accumulates. When there is debt, it should be paid off immediately. To pay off first, someone needs to analyze, what kind of debt he has.
Debt there are two types, namely consumptive debt, and productive debt. What is often a disadvantage is consumer debt, because it is like buying goods whose value keeps falling. Example of his credit card.
Here’s how to manage debt to get paid off quickly.
Creating Checklist and Checking Debt Ratio
The first easy way is to list your own debts. Maybe this way you never do, but quite effective.
Make a list such as a lease debt, loans to family or friends and so forth. Then you check the debt ratio. If it exceeds 30 percent of revenue, it is included as consumptive debt.
After that, you try to compare between revenue and assets, then determine also the ratio. It will be useful to know the ability to pay it later. That should be less than the 50 percent ratio.
Do not Increase Debt and Prepare Budgets
If that exceeds the 30 percent ratio, then do not add more. Better prepare the budget to pay off. Try to limit your spending as much as possible.
Check back on your vacation plans, plans to buy new cars and other plans that lead to big expenses.
Cut out your spending, and set the budget out of the savings, to start paying off. It would be even better if you are looking for a new side job that can make money for you.
Assessing Owned Assets
If that already exceeds the 30 percent ratio, then you can try to assess your assets. Because it still has to be paid off. You can try to sell some assets that might help pay off.
Consider selling a vehicle, which may be a sizeable amount of money, and immediately pay off.
Intention and Discipline to Pay Off Debts
Make sure your intention and discipline in order to pay off, is maximal. That way, what you do to pay off, will run smoothly. Because it is the intention to be completely free. Manage to spend well, prioritize savings and save.