Debt is a sum of money borrowed by an individual or business corporation from another party, individual, financial institution, or bank. This sum is usually borrowed to expand business or make a large purchase, which is not possible in normal situations. However, certain terms and conditions are involved in this entire process along with some interest rates for managing debt in UAE.
Often these debts can lead to stress and tension if you fail to repay them. Many people struggle to reduce this mountain of debt. Nowadays, with the increase in requirements, almost everyone is under a certain amount of debt. A survey conducted in UAE revealed that about 75% of people had missed at least one debt repayment in the past. If not handled properly, debts can become financial barricades and take away your freedom. Hence the sooner you realize, the better strategy you can make to repay all the debts. Not repaying the debts on time can make you land up in serious financial troubles. There is no possible way to escape this situation, so you will have to know how to manage it.
Some pointers that you should keep in mind while managing debts:
1. Ignoring debts is the first step when you invite problems
When you keep ignoring the problem, the problem gets worst. The same applied to the debts as well. According to experts, if more than half of your salary goes into paying off the debts, then something is surely wrong.
2. Make a list of how much debt you owe and from whom it was borrowed
Making a list should be the first step towards dealing with debts. This helps you to know how to proceed with this repaying back process. You also get to know how much you owe in total and how much time you will require to pay off all the debts.
3. Make a proper list of your spending and keep regular track of them
Sometimes, people be spendthrift and forget to track their expenditure, which is wrong. When you are in debt, make a proper list of your expenditures. Prioritize your essential expenditures and determine your daily allowances.
4. Find out ways to increase your income
You can invest your savings in mutual funds if you are ready to take some risk. Try to increase your monthly income by some innovative means. You can go for a side business or take a second job, try doing some overtime in the office or work hard for a promotion.
5. Make a proper strategy to minimize your expenditure
As you have already made a list of your expenditures, this will not be a difficult job. Try to figure out your less important expenditures which can be cut down in the meantime. Plans of holidays and expensive buys such as gold and car can surely be avoided. This will lead to more money-saving which can eventually help you in reducing your debts.
6. Analyze proper repaying solutions
This is however the most important step of this process. Determine some good repaying solutions which can help you repay the debts quickly and efficiently. You can contact a financial advisor and make the strategy according to your income and expenditure. Ask for several strategies and go for the one which suits you the best.
7. Prioritize your repayments
Look for the due dates and due payments. Prioritize the most important payments whose due dates are near. Avoid the use of credit cards as far as possible and do not apply for new credit cards.
8. Rearrange your debts accordingly
Talking about credit card debts, try to pay off the debts in the interest-free periods itself to avoid further debt. You can look for debt consolidation loans that will help you combine all the debts and reduce the interest rates. This will make the debts more manageable and payable.
9. Approach your bank soon and have proper negotiations
If at any point, you are unable to manage your repaying schedule then contact your bank as soon as possible. Have proper negotiations and remember that politeness is the key. There are chances that banks will not understand at ones but you need to keep trying. You can even ask for a tenure extension.
10. Avoid repeating the mistakes that you already made
By now, you will be able to figure out that what went wrong in the entire process of borrowing the money and repaying debts.
11. Be honest, stick to the plan, and track your progress
Be honest with yourself and your repayments. Remember that there is no other way out than to repay. Stick to the same planned strategy because changing strategies every time can complicate the situations even more.
So these were some of the essential pointers that you need to remember while facing debts.
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