A type of debt, and schedule of payments,

A
critical component of personal finance is avoiding debt build up. The subject
of debt
management is a growing concern of many in Malaysia.
One of the major reasons why financial liabilities are growing in alarming
proportions is the unrestrained use of credit cards

If
you are a responsible borrower, debt repayment is of paramount importance. The
matter should be treated with urgency. There has to be a conscious effort to reduce
your monthly debt commitment until all debt is settled.

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Take immediate action

Thinking about reducing your mountain of debt is
mentally draining. You can’t put the blame on anyone except yourself. You could
have escaped the piling up of debt if only you had the discipline to take
control. But that is in hindsight.

Nonetheless, your debt won’t simply go away. Others
even engage the services of professional counselors or the so-called
‘debt-relief’ experts. That might entail added costs which is something you’d
like to avoid.

The best way to contain the situation is to fix your
financial dilemma on your own. With some smart planning and determined
approach, your financial burden can be lessened and your monthly debt
commitment reduced.

5 ways to reduce your monthly
debt commitment

The hardest part of
any debt reduction goal is knowing where to start. The timing is no longer a
question because prompt attention is needed. If you’re firm on resolving the
matter, follow these ways that can help you bring down your outstanding
balances to manageable levels.

1.    Assess
your financial obligations

A good starting point is to ‘accurately’ evaluate your
current debt situation. When you know the exact amount, type of debt, and
schedule of payments, it would help you plan out better.

What appears insurmountable at first would be doable
if you’re organized and systematic in dealing with your circumstance. You can
seek the best alternatives to reduce your monthly debt commitments.

2.    Align
your budget with your debt commitment

After you have assessed your financial obligations, review
your monthly budget. Do some financial exercise and list down ‘all’ your
regular and recurring expenses. Do not leave out any expense that would have a
material effect on your monthly budget.

Once you have deducted all of the expenses, the leftover cash will be the amount you can afford
to pay your monthly debt commitments. You can increase your disposable income
by revisiting your expense list.

Look for the non-essentials like cable or i-net
subscriptions and other stuff. Reduce your monthly spending on these items. It
will put you in a better financial position as you begin a crucial activity.

3.    Craft
a debt reduction plan

When everything is arranged, you can craft a workable
debt reduction plan. Earmark your available monthly cash on hand for those
debts that hurt the most. It means you prioritize paying the loan with the
highest interest rate and highest outstanding balance.

The plan will be a continuing cycle every month. Your
objective is to significantly reduce the debt balance, if not fully liquidate
them. Repeat the process of ranking the debts according to the highest rate and
outstanding balance.

As you’re implementing the debt reduction plan, you’re
also tempering your spending. In particular, you need to put a stop on your
credit card usage. Accumulating more charges will only set you back and wreck
your debt reduction strategy.

4.    Negotiate
with your creditors

Another approach is to negotiate with your creditors.
Instead of turning your back and evading their collection follow-ups, face up
to them. Negotiating with the banks or credit card companies is not a sign of
surrender. Informing them of your predicament reflects your willingness to pay.

There’s more to gain in case your creditors agree to a
reduced settlement or debt restructuring scheme. A payment extension might be
granted too. Also, if there’s a window to move your credit card debt to a new
one with lower interest rates, do it.

Consider obtaining a personal loan to pay off debts
and consolidate them in one basket. Some who took this option were able to reduce
their monthly debt commitments. Debt consolidation offers a lot of benefits too. Do not take this route if it will not
lighten your financial cargo.

5.    Execute
your debt plan diligently

The success of your debt reduction plan rides on your
shoulders. Just as your accumulation of debt is your own doing, resolving the
problem is your own lookout.

As such, executing your plan consistently, without
fail, is a surefire way to achieve your financial goal. Start implementing your debt plan the
minute you are ready. No time should be wasted. The sooner you get the job
done, the better.

Be your own debt handler

A debt problem is a very private matter. If you
do want to disclose your financial concern, keep it a secret and deal with it
by yourself. You can pull it off if you can strictly implement your
personally-crafted debt reduction plan. Your financial mistake can only be
corrected with willpower. Once you’ve succeeded, learn from your debt blunders.
A debt-free situation is far better than a debt-ridden condition.