How to Best Manage Your Loan PortfolioFast Action Finance SEO
In this day and age, thousands of Canadians are struggling with debt. It is not just a phenomenon that is unique to Canada but is a global phenomenon. This is because as credit has become more and more available, it has led to a situation where many people are borrowing without really thinking through how they will manage their debt and use loans productively.
Sadly it doesn’t have to be so. Credit is an immensely useful tool that can build wealth for you and allow you to achieve all your financial goals. That is if it is used and managed wisely. Following the tips below will help you manage your loan portfolio to your advantage.
It all starts with borrowing. When you are seeking loans, ensure that you have a clear repayment plan and that you have provided enough in your monthly income to make the monthly repayment schedules. As much as possible, ensure that most of your borrowing is geared towards income earning and not day-to-day expenditure.
This is because if you are borrowing to finance a business or an income-earning project, there is a possibility that the earnings from the business could go towards paying off the debt and thus relieving you of the burden of paying the debt from your current income. If you are borrowing to pay off your living expenses, then there is something critically wrong with the way you are living and you need to make adjustments to your lifestyles. The golden rule of thumb is that you must never spend more than you earn.
Pay debts in time
Skipping payments or being late on payment on your loans attracts penalties that add to the total cost of the debt that you need to pay. Always ensure that you are paying off your debts in time including credit card debts. If you need to, arrange with your bank to automatically remit the funds to pay off your various debts at set times of the month to ensure that you do not forget to pay any payment. This will also force you to budget so as to allocate the money that you need to pay off your debts.
If you are paid weekly or monthly, ensure that you pay off your debts first and then plan your living expenses on what is left. Delaying payment often leads to situations where you end up spending the money that you need to pay off your debts. If you have various loans, you could consider consolidating them into one loan with the best terms possible, which makes repayment easier and more manageable.
Budget and plan
Related closely to this and mentioned above is the need to budget and plan your finances. What budgeting does it to allow you to see at a glance your biggest areas of expenditure and to work out ways in which you can cut back on your expenses. Of course budgeting is useless if you do not then have the discipline to follow through with what you have set. Make it a habit to track your day-to-day expenses and retrospectively analyze your expenditure over a given period of time. You are likely to see trends that you can learn from and improve your spending habits.
Although collateral borrowing often gets a bad rap, it is a useful and quick way to convert assets into cash and in the case of car title loans, help you continue using the asset while you pay off the loan. For example, if you are a taxi driver with significant and unexpected repair costs for your taxi; you could easily and quickly borrow with your car and then once the taxi is back on the road, use the income to pay off the debt. This reduces your down time and has you back on the road as quickly as possible.
With adequate planning, you can easily manage your debt and your overall finances and achieve the financial independence that you desire.