People are now are starting to realize the pitfalls of having too much debt so many of them are trying to reverse the situation. Although it may take a while to be free of CREDIT liabilities, global debt situation (at least in the Northern Part of the Globe) is actually on the decline. The following are five important tips relative to Family debt Management.
Balance your Assets and Liabilities
This is a principle that most financial institutions live by. The idea here is to for your assets to be available at the opportune time that you will need them. No long term loan for some fixed assets like vehicles. Make sure they are paid within the allowed depreciative years or even earlier. An example of this is still paying amortization for a car which is already 10 years old. You should also try to avoid financing long term assets such as real estate properties with short term loan such as that from a credit card. This would only spell trouble for you later on.
Keep Money in the Bank
This may be quite traditional but it works. Liquidity saves you. If you have liquid lying around unexpected expenses can easily be controlled. If the liquid you have is not enough, at least BORROWING won’t be much of a problem considering that the loan you will need will be small thereby allowing you to have control in paying it back.
Replenish Your Savings and keep your debt to a minimal
Never used up all your savings. Have a plan on how you will return what you’ve gotten from your savings. Treat your savings as a place to get a loan. Make it a point to replenish what you get by amortizing what you get from it. Look at it this way; if you did not have any saving, you would have gone to a MONEY LENDER to borrow money and you would have to pay that back too. Do the same to what you will get from your savings. Debts are unavoidable monthly expense so keep them at bay. Remember that the larger your debt is the less flexibility you have.