Take your “financial temperature”
Every once in a while, it is a good idea to take a closer look at your current debt situation. That way you can take the temperature, so to speak, of your current financial situation. A good place to start is to create a list with all your existing loans/debts and beside each to write the current interest rate, balance outstanding, and current payment arrangements, if any.
You may be surprised at how much debt you have taken on without your noticing it piling up. By checking in once in a while, you will be better equipped to handle your debt before it becomes too burdensome.
Make your list
To get you started on your list, I’ve listed a few of the most common debt sources that most individuals have, and have listed some questions that you might want to ask.
- Credit cards – How many credit cards do you have? What are their current interest rates? Are you keeping up with your payments so you don’t get slammed with high interest charges? Are you paying annual fees? These are some of the questions you should be asking yourself as you list your credit card details.
- Car loans – What are your credit terms? Are your payments manageable? Are your terms comparable with the leading lending institutions? It never hurts to do some research to make sure you are getting the best rates. Check out sites like https://www.clearscore.com/ and others to ensure you are getting the best deal. If not, you can leverage these offers in an attempt to negotiate better terms.
- Mortgages – If you have extra funds available, are you aware of your mortgage repayment options? Mortgages usually have lower interest rates than other sources of debt, so it’s usually advisable to pay off higher interest debt first, but if your only debt is your mortgage, it’s nice to know what your options are in the event that you can afford to pay down your mortgage faster. Another question to ask – do you know when your mortgage term is up? You will want to be on top of that one because you will have to do some research before committing to new terms. Financial institutions will take for granted that you won’t pay attention to this – but once your term is up, you are free to bargain for the best terms possible.
This list is by no means exhaustive. There are many other types of debt that individuals utilise, and there are more questions that you should be asking yourself when you check in regarding your debt situation.
Prioritize your debt
After making a complete list and answering the questions above, the next step is to prioritize your debt. If you are not in a situation where you have trouble keeping up with your payments, then good for you, but if you find yourself struggling to make ends meet, it is very important to pay the most important bills first.
It’s always a good idea to keep tabs on your current financial situation. You want to be prepared in the event of job loss or an emergency. If you have trouble doing this on your own, find a trusted advisor to help you with the process.
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