Debts are part and parcel of life for almost all the middle-income Singaporeans. However, when our debts grow beyond our potential of repayment, it becomes a major source of concern. The most common debts for Singaporeans are home loans, car loans and credit card loans.
Signs of Debt Crisis
To build an effective plan for managing your debts, you and your financial consultant must find out and analyze the situation as soon as possible. Firstly, you need to calculate your debt ratio. If 80% of your monthly income is used for paying various loans, you are already in a crisis situation. One unplanned expenditure, such as a medical crisis, can affect your instalment payment for a month and even more. The situation will continue to worsen if you do not take the right steps now. Other signs are rejection of credit request from your bank and minimum repayment amount of your debt each month. You are in a debt crisis if you have to choose between your necessities of life and your debt repayments.
Steps to get out of Debt Crisis
These four steps can help you get out of your uncontrolled debt if implemented in the right manner.
Acceptance is the first step: If you are in debt, there is no need to hide it from your close friends and family members and maintain the same lifestyle just for the sake of it. It will do nothing more than land you in bankruptcy . Accept the fact that you have loans to repay and prepare yourself to curtail unncessary expenses.
Establish goals to get out of debt: You need to prioritize your goals in life, whether financial or personal. This would help you understand which loans to repay first and which to delay. Break your entire debt into smaller parts and repay the ones which are most essential. For example, your home is an absolute priority but not your car, so if you are in debt, try to pay off your home loan first and let your car loan to take a back seat for some time or sell off your car. You can also choose to pay the loan with the higher interest first, follow with the rest. This will certainly reduce your burden and anxiety.
Don’t avoid your creditors: One of the biggest mistakes you can do while in a debt crisis is to avoid the creditors. You are obviously in a difficult situation but avoiding the calls will land you in dire straits. It is better to talk to them while you are restructuring your plan for repayment and let them know the truth.
Control your expenses: Once you have repaid all your loans and mortgages, try to avoid them in the future as much as possible. If you need to take up any debt, make sure it does not go out of your control.
http://teamconcurs.com.sg/wp-content/uploads/2017/04/logo-300x109.png00teamconhttp://teamconcurs.com.sg/wp-content/uploads/2017/04/logo-300x109.pngteamcon2018-01-10 07:21:022018-01-10 07:21:10How Can You Analyse and Manage Your Debts?