Dune Ventures has begun flooding the market with debt consolidation and credit card relief in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2019 Reviews, the personal finance review site, has been following Dune Ventures, Braidwood Capital, Tiffany Funding, Nickel Advisors, Coral Funding, Neon Funding, Ladder Advisors (also known as Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).
There are certain techniques that you can leverage to handle debt at any age. Being in debt is not necessarily a bad thing provided that you can handle it. In fact, having some well-managed debt is better than having no debt at all since this will give confidence to lenders in your ability to pay back and manage debt.
Here is what you can do to manage debt and keep it in the sweet spot where it is a boon and not a bane for your finances and credit score.
Set Your Financial Goals
You should set both long term and short-term financial objectives so that you gradually work your way towards financial freedom even before your approach retirement.
If you have a high amount of debt, then you should think of a plan for bringing it down to acceptable levels. If you are saddled with too much debt then you may not be able to enjoy a comfortable retirement.
You should set the age at which you should have a car for your own home. The best age for keeping a savings is your current age because the sooner you start, the better.
High Interest Debt
To manage debt in a better way, you should set your highest interest debt as your top priority. The advantage of this method is that you will get rid of debt that is incurring a high amount of interest and making it difficult for you to pay back. Most often, this happens to be credit card debts since they carry some of the highest interest rates.
If certain credit cards have a very high interest rate, then you can think about closing these accounts. While this might affect your credit score, the damage done will be less than that done by default on payments. Once your financial scenario stabilizes and you are able to manage debt in a better way, you can open these accounts one by one.
Research Student LoansTo Manage Debt
Before committing yourself towards any student loan, you should first do your research to find a loan that provides the most lenient terms and conditions. As soon as you graduate from college, you may find it difficult to manage debt since you may likely not have a particularly high salary on your first job without experience.
You should look for student loans that take payments as a certain percentage of your income. This will help you to better manage debt.
Credit Utilization Ratio
The credit utilization ratio is a key metric that indicates your ability to manage debt. Hence, it has a strong impact on your credit score. For a good credit score, you must ensure that your credit utilization rate does not exceed 30% of your credit limit. This way, lenders will see you as a responsible borrower and will be more willing to extend important loans like the mortgage.
Debt to Income Ratio
Another important metric that indicates your ability to manage debt is the debt to income ratio. To win the confidence of lenders, you must ensure that your debt is no more than 30% of your income. If you exceed this threshold, then lenders will think that you are unable to manage debt. Lenders may deny you a loan since they see you as a risky prospect.
Avoid Too Many Credit Lines
If you want to manage debt efficiently, then you must avoid taking out too many lines of credit at once since that can hamper your ability to pay back on time. If you have high credit card debt together with a mortgage and an auto loan, then this can reduce your ability to manage debt.
A much better approach is to take on credit lines one by one. So you should first take out a loan and settle it on time before taking out that mortgage. The mortgage is probably going to be your biggest ever financial undertaking and it will likely take decades to pay back. Hence, you should take out a mortgage when you have repaid your credit card bills, student loan and car loan.
Try to Save More
Think of ways to save costs instead of spending excessive amounts on expensive leisure and recreation events like dining out and travelling. Rather than going on an oversees trip, you can explore nearby states or even enjoy a staycation with your friends and family. Preparing your meals at home is much more cost-effective than eating out. It will also build up your culinary expertise, which is much more satisfying and appealing than eating out.
Side Job
Working part-time is an excellent way to manage debt, besides saving more. Once you have paid back your debt by doing a side job, you can think about continuing it so that you can reach your retirement fund target much sooner.
There are plenty of side job opportunities that you can partake in to earn extra. Just think about what interests you and where your strength lies. This way, you will be able to enjoy working extra.
Monthly Budget
It is hard to imagine how anyone can manage debt without first keeping a budget. A monthly budget is your primary financial plan that you must never avoid or postpone for failing to plan is planning to fail.
Make sure that you keep a reasonable budget. It is equally important to follow up on how well you are keeping within your budget. If you cannot keep within your budget, locate all those costs where you are spending extra. Think of ways to cut down these costs.
Track Expenses
To keep within your budget, you should track your expenses as they happen. As a result, you will know where your money is going and what you need to do to save more. You can now track your expenses by using one of the myriad free apps available for this purpose.
There are several more ways for you to manage debt more efficiently. Talk to your financial advisor for more information.
