As obvious as it may seem, one of the first steps to begin resolving your mounting debt is to truly realise and acknowledge that you are facing a rolling debt issue. Once you’ve accomplished that and evaluated the level of debt you’re in, consider half the job done.
It is essential to be mindful of the full magnitude of what you are dealing with when it comes to debt. However, if you are expecting to overcome your credit woes swiftly, you’ve got to understand that it’s going to take some dedicated hard work and strong discipline on your part. After which it all starts with a change of habits or circumstances, where feasible.
Unfortunately, there is no easy formula and no one-size-fits-all solution to clearing debt. If it took you time to accumulate your current debt, you’re going to need time to get out of it. In addition to the above, you’d need careful guidance to get your finances back in shape. As we progress through this tough year 2021, always be reminded that it is never too late to ask for help and advice when it comes to managing your personal finance.
We’ve curated five helpful tips to work your way to reducing debt as we hope to transit into 2022 debt-free.
1. Cutting Back
When you start to reducing on your expenditures, you’d consciously find corners that you can cut and still tide through the month. The simplest of changes in lifestyle habits can prove to result in savings, such as being aware of your monthly electricity usage and turning off lights that are not needed as you leave a room, will in turn decrease your bill expenditures. Once you become more mindful of your everyday spending habits, you’d start to notice more such ways to cut back each month.
2. Work on budgeting
Budget your income, list all of your monthly bills and their due dates. Apply them to your budget as well as other household needs. Allow yourself a fixed amount per month to spend on miscellaneous things or small luxuries. In the long run, sticking to your budget will build self-control and determination for reducing your debt.
3. Use credit cards wisely
If you feel that you are unable to afford something, do not buy it. It is really as simple as that. If you have to charge purchases on your credit card, make sure to pay the balance in full when your next credit card statement comes in. Never pay only the minimum monthly overdue amount as that would mean you will be liable to pay interest, creating a vicious cycle of snowballing more debt.
4. Pay off all debt
If you’ve already accumulated some debt you need to pay off, now is the time to get started with working on your repayment plan. Decide which debt is the most manageable and start repaying that one. Once you’ve paid off your smallest debt, you’d build more confidence about paying off the bigger ones. Calculate your move to the next one using the aforementioned tips without feeling overwhelmed. And before you know it, all your debt will be paid off and you’d feel a huge sense of relief (trust us, there’s no bigger satisfaction as this).
5. Credit counselling
Seek assistance on credit counselling if you’re unsure where and how to start working on your credit woes. There is no need to be ashamed of reaching out for the right guidance when you’re in need of financial help. Credit Counselling Singapore works with individuals in debt to understand their financial situation and assess their repayment capacity as well as facilitate debt repayment arrangements with creditors on their behalf.
Brought to you by Credit Bureau Singapore. Follow Credit Bureau Singapore’s (CBS) Facebook for more of such updates and tips on how to stay credit active!