Reckless Borrowing
Reckless borrowing symptoms
- you have had to borrow money to pay off a debt
- you are unable to meet your monthly repayments
- you are overwhelmed by your financial situation
- also see lending
Consider the following steps to manage your debt and eventually get out of debt.
- Stop increasing your debt
Stop borrowing money or making purchases on credit.
- Record your spending
You're in debt because you spent money you didn't have and your debt didn't come from one single huge purchase. Avoiding more debt starts with knowing what you are spending your money on. Record your spending daily for a month (at least), write down every thebe you spend, no matter how small.
- Figure out how much you owe, to whom, and on what terms
In a spreadsheet, list all your debts, balances, interest rates and minimum payments this includes Gather your bills and make a simple list or spreadsheet of all the debts you have. Knowing your minimum payments and interest rates will help you decide on your debt repayment strategy. List your debts in order of highest-interest rate to lowest. Keep the list easily accessible and editable so you can refer to it
- Start paying it off
Now develop your debt management plan.
Do you have debts that are past due?
Do you have debts with exceedingly high interest rates?
Consider these top priorities.
This could include agreeing with your creditors a way forward to allow you to make the repayments. If you can find a P300 from your spending during your month, channel it towards paying your debts. See more saving tips here.
If from your list of debts, you owe P1,000 on a store credit card that has an interest rate of 10%, P1,000 from a lender with an interest rate of 15%, and P15,000 on a loan with an interest rate of 5%.
Pay the minimum on your low interest rate debts and apply the bulk of your P300 to the highest interest rate, in this case, your 15% store credit card, despite the fact that the actual cost of the student loan interest is highest.
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