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How to manage your personal debt?

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manage your Personal debt

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Personal debt, this one term has different meaning to different people. Some people see it as an enabler which helps them in getting what they want and some people see it as a burden on their shoulders which they seem to hate. In reality, it can be both.

What does Personal Debt entails in the current scenario?

Personal Debt nowadays means debt incurred by a person to buy something he fancies or needs and he can borrow it from lenders like banks, people and other institutions. People take the money from such lenders and usually pay an interest (depending on the principal and interest rate agreed upon) on debt incurred. It also includes credit card debt, automobile loans, and house loans. Recently many banks have started to offer personal loans, gold loans and loans for buying electronics items like TVs, laptops and even mobile phones.

How it can be good for you?

Personal debt can be an enabler. You can buy things you need and want and you can pay as per your need. A person can pay in easy EMIs and doesn’t need to spend from his personal savings, instead he can pay it out from his future cash flows. Thus in a way it is a good thing for people who are sure of a fixed income. One can also hypothecate some of his belongings like gold and house and fulfill the immediate needs of cash.

With Individual Voluntary Arrangement you can also manage your unsecured debt. An IVA acts like a legal agreement between you and the creditor which usually lasts for 5 years. During this period you pay only what you can afford to pay outside reasonable living costs. All interest charges freezes to 0% and  creditors cannot demand for additional payment as long as monthly IVA payment is made. Once IVA has completed, all remaining debt will be legally written off.

But what are the downsides?

Now comes the tricky part. Personal debt can be an enabler but it can also be a rat trap for you. Personal Debt has many downsides and if incurred beyond a limit, it can destroy your finances and economic wellbeing and you can get bankrupt. It can be a great cause of worry if your personal debt is huge but why exactly? The truth is: most people’s sole asset (let’s assume that asset is something which gives you income) is their monthly

salary only. And they have lots of liabilities (let’s assume that liabilities take something out of your pocket). But how it affects them? Well haven’t you felt the money crunch? Lots of people complain that their salary lasts for one two weeks and they barely get by for the rest of the week. Many people who complain about having no savings are the people who have higher than average salaries and many of them belong to families where many people earn. Why is that? The simplest logic is their expenditure is much higher than their income. And this creates a problem. Most of the people nowadays have low survival ability i.e. if their salary stops coming in, they will go bankrupt very soon. Such people are living from salary to salary and have meager savings and high debts(mostly credit cards). This is really a dangerous condition.

High personal debt means high negative cashflow. Many payments are needed to be paid at the beginning of each month thus the amount you can save goes down. Also the money you have for your immediate needs goes down which causes more credit card debt. Also the interest rates are usually very high for credit card debts. Just imagine, if anyone buys a car worth 5 lakh with 2 lakh down payment and 3 lakh loan, the car might cost him around 7lakh with interest.

Don’t incur high personal debt!!!

How to manage your Personal Debt?

Hopefully by now you will be interested in managing your personal debt. There are some basic guidelines which might help you in managing your personal debt successfully.

1. Try to buy things with cash – If you don’t use your credit card much, you will find that you are buying things less than usual. Also it is hard to choose between a hand full of cash and an item (try it). Your expenditure will go down and you will find that you also save credit card dues and fees (even if it is a ‘free’ credit card, there is usually a limit beyond which, it is free of annual charges).

2. Use tools in the market – There are many tools, available online, using which you can bring your debt down slowly. These are developed by financial experts and you can check them out. I found one such debt calculator tool which I personally recommend. It is an excellent tool which can actually help and is easy to use.  It is the debt calculator at www.IVA.com

An IVA theoretically is an Individual Voluntary Agreement which can help you in managing your unsecured debt. You can take advantage of the fixed rates of IVA and use them to slowly and securely pay your debt. This scheme can thus help you in getting debt free and also offers you protection from creditors which many other debt reducing plans like Debt Management Plans do not.

To avail the benefits of IVA you need to get your financial condition assessed by an Insolvency Practioner (IP). A fixed rate will be chosen and then you can slowly pay off your debt. Mostly IVAs can help you finish your debt in a short duration of just five years.

 3. Save more – There is no alternative to saving more. If you have enough savings you can weather many disasters and it will increase your survival ability. Also you will feel much less anxiety if you know that you have enough financial resources to survive.

4. Get income generating assets – You should always try to get as much positive cashflow as possible. Invest in schemes, buy shares or real estate (which should get you some income every month) or operate some side business. It will also enable to retire earlier and live a tension free post retirement life.

I hope that this article has encouraged you to think and maybe have given you some ideas to how to manage your personal debt and finances effectively. Please do share your thoughts on the subject, I would be glad to reply to your comments.

I am a software engineer in a prestigious MNC. I am NSE certified derivatives professional and I like to dabble in money making schemes a lot. I like to read, play subway surfer on my tab and I am always connected to internet.

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3 Tips For An Easy House Move

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Moving home is so exciting, right? A fresh start, a lovely new place, a new neighbourhood to explore. You feel like a little kid again – those night-before-the-move jitters and arranging all your furniture into a great new space is an unbeatable feeling. However, as we all know, moving can also be expensive and stressful. Especially with lots of furniture, children, pets and a limited amount of time, the task can feel insurmountable. Here are three tips for an easy house move.

1. Hiring Your Own Lorry

Removal companies are great if you have all your own furniture, and no way of transporting it. However if you have a partially furnished let, wherein you’ll have some,but not all of your furnishings already set up in the new property, you could hire your own truck. This will save a lot of money and will ease your move. You can hire the lorry for as long as you need it, and you can have a fun road trip all of your own!

Ensure that when you hire or buy your own lorry, you look into lorry insurance and invest in proper precautions. 

2. Asking For Help With Child And Pet Care

If you are moving with young children, dogs or cats, the move can become infinitely more complicated and difficult. If you have close friends or family who can take care of your children or pets for you, this would help your move immensely. Having to take care of small children whilst lifting heavy boxes and organising a million things at once can be a big challenge, and can even lead to accidents. Children can be overwhelmed by moving house, so it is much better to have them come to your new home when you have had a chance to organise the space and make it feel like home.

Similarly, dogs and cats can become stressed by a change in location. If the place is in disarray, the animals can become even more frightened and restless. It is better to have a friend, family or professional pet care company take care of them whilst your house move is taking place.

3. Time Off Work

Although it can feel wasteful to take holiday from work just to move house, you’ll thank yourself later for taking the time. Moving into a new house might only take one day, but the unpacking, organising and cleaning process can take far longer. If you take a few days, or even a week, to complete your move, you can return to work with a fresh slate, knowing you’ll be coming back to an organised, calm home!

Plus, this way you can actually enjoy your move, rather than treating it as a stressful nightmare! You can make the most of the new space, experiment with the layout, and truly transform this house into a home which you will be enjoying for years to come.

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3 Issues Repair Workers Are Facing During The Corona Pandemic

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It’s fair to say that the whole economy and multiple industries have taken a hit due to the coronavirus pandemic. Lockdown forced many companies to close their doors while others were forced into administration. At the same time, numerous businesses have also struggled with how to restart their respective models and get things firing on all cylinders once more. However some companies have been hit harder than others. 

Maintenance and repair workers such as plumbers and electricians are facing significant difficulties right now. Here are some of the issues that they are dealing with and the potential solutions. 

Social Distancing 

One of the greatest issues right now is that it seems social distancing is key to preventing the spread of the virus. Ultimately, this means that people are wary about being around others and potentially letting individuals into their homes. That’s a definite problem for repair workers who often require access to complete their jobs. Now, you might assume that people will call repair workers out regardless because it’s an emergency. However, a lot of time a repair doesn’t seem like an emergency and people will put it off for as long as possible. 

The challenge here is convincing customers and clients that safety can be maintained in this type of situation. More often than not, this is about ensuring that PPE is used and readily available for workers. Businesses also need to be clear about the things they are doing to keep everyone safe. 

Getting Supplies

We have seen numerous factories and businesses forced to close due to coronavirus outbreaks. The issue here is that this leaves a lot of companies unable to get the products that they need. It can cause businesses to grind to a halt, particularly plumbers and electricians that often require access to spare parts. 

Luckily, key parts such as a 3 way ball valve can still be found online and at reasonable prices. But, repair companies may still need to expand their search and look to companies that they haven’t used before to ensure that they have the parts they need. 

Financial Losses

It’s like that repair companies and maintenance workers, particularly freelancers, have sustained substantial losses over the past few months. While there has been government support to help mitigate the damage, this may not have been enough. Companies will also need to consider how they can protect their model from future damage. This does mean that they need to think about insurance options. There is insurance coverage that could potentially help if there is a dreaded second wave or a new outbreak. By getting the insurance in place now, companies like this will be able to keep their business afloat and the lights on. It could also help if the coronavirus pandemic does cause a massive economic disaster as many analysts seem to fear. 

We hope this helps you understand the challenges that these workers and businesses are facing. It’s like that many will bounce back eventually but there could definitely be some rough roads ahead before things are able to snap back into place.

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Business Essentials to Cross off Your Checklist This Year

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There are a lot of elements that you are going to need to work on when it comes to improving and enhancing your business, and this is why you have to look at the best possible business essentials. There are so many things that you are going to need to get right if you are serious about making the right changes for your business. Try to do as much as you can to improve the company moving forward, and work on taking steps to get this right. 

You are going to need to focus on doing as much as possible to make a difference to your business right now. There are a lot of things that play a part in taking things to the next level for your business. And you have a lot you need to consider when trying to achieve the best success you can. Here is a checklist of some of the top business essentials you need to be crossing off this year. 

Improve Your Efficiency 

Improving your efficiency as a company is one of the most important things you can do, and this is why it is so important to make sure you focus on getting this right as much as possible. You are going to have to focus on doing what you can to get your company operating in a more efficient manner, and there are a lot of things you can do to help you achieve this. Look at things like outsourcing and trying to digitize the business as much as you possibly can. 

Bolster Your Security

Business security is so important for protecting the future of the brand, and this is something you are going to have to get right as much as possible. Now, these days, it is so important to make sure you think about the threat of cybersecurity, as this is something that can cause problems for your business. So, you need to make sure you look at what you can do to improve your company’s cybersecurity and guard against cybercrime and online attacks that could harm your business. 

Look for Value

You need to make sure you look for value wherever you can find it, and this can make a huge difference to the way the business comes across. There are a lot of elements that play a role in being able to get this right as much as possible and you have to consider where you can source value as a business owner. For example, looking at things like used agricultural machinery is an excellent way of being able to find and make the most of value in the modern business world.

Hire the Best Talent

Hiring the best talent for your business is also something you need to sort out right now. There are a lot of tips and techniques you can use to help you here, and having a strong hiring policy will really help you out. This is one of the most important elements that you are going to have to keep in mind right now, and it will help you to make the best decisions as a business owner right now. 

You need to have an idea in mind of what you can do to make the best possible business decisions right now, and take things to the next level. There are a lot of decisions that need to be made, and this is something that plays a big part in that process as well. Do what you can to focus on improving the business by making sure you look at these essentials as much as possible. 

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