Managing your debt is a vital part to your financial plan. Debt can prohibit you from achieving your financial goals if not managed properly.
Before you incur debt
- Do you really need it, or is it something you want? If it is something you want, you should resist the temptation of instant gratification and rather plan to save for this purchase.
- Revisit your budget and determine what amount you can repay for this purchase.
- Determine how fast you will be able repay the loan. The longer the period in which you repay the loan, the more interest you will repay over the term of the loan.
- Remember that the cost of credit is not simply the price of the item plus the interest at the rate of the loan. Download our cost of credit calculator.
Managing your existing debt
Before you start your plan to become debt free you will need to have the following information for each of the loans you have:
- The current balance of the loan
- The remaining term of the loan
- The current instalment you are paying
- The interest rate on the loan
Your Debt Schedule should look like this:
|NAME OF CREDITOR||AMOUNT OUTSTANDING||MINIMUM MONTHLY REPAYMENT||INTEREST RATE||LOAN REPAYMENT START DATE||LOAN REPAYMENT FINISH DATE|
You can now use our debt reduction calculator to guide you on how you can reduce your debt.
If you need more guidance on how to deal with your debt, consult with a FPI professional member.