Managing debt of the credit card, overdraft and controlling expenses is daunting task. But it is important to know, what you owe and how much you owe?. Spending whole life in debt can make you compromise with other financial goals.

But there is always a way to manage debt and control expenses, understand interest rate and other hidden charges of debt. 

Unless you don’t control your expenses effectively, no matter how much you earn, debt will always follow you. Management of financial affairs is a big challenge because nobody wants to tolerate mismanaged finance.

Majority of American hold three types of debt Mortgage, Personal debt, Student loan and Credit Card debt. 

Mortgage debt stands about seven times larger than student loan debt, and about 10 times greater than credit card debt in the United States.

Personal loan – Average American now has about $40,000 in personal debt. 

Student Loan – Student loan is good loan as it helps them to complete the quality education and allow some tax benefits plus lower interest rate.

Credit Card loan – Credit Card loan is bad loan as interest rate for credit card is higher than any other debt

To live a Pacific Life, it is necessary to manage financial affairs effectively. Are you  worried about managing financial situation? Then this article is for you. These are some ways to manage debts of the credit cards, overdrafts, and control expenses.



1. Determine which debt cost you more.

The first step in managing debt is to keep a record of the various debts that a person has to pay off. Following this, it’s beneficial to ensure that we pay all payments on time, and from related cash inflows.

You should at least pay minimum due amount to avoid late payment fees and interest on same. Setup auto payment option for the minimum payment to avoid late payment.

It would also be better to prioritize debts according to their interest rates. Thus, paying off debts that cost more would result in a saving in the long run. Finally, it should be a habit not to rely on debt for anything.

Managing unsecured debt such as credit card debt, bank overdraft and personal loan regularly is good practice.


2. Credit Card debt Management

Credit cards can be an ideal financial source, however, they can ruin your financial plans with high charged interest. Using credit cards is the easiest way to accumulate debt, which can keep on increasing if not paid off ASAP.

It would be beneficial to stop using credit cards altogether until we have paid the outstanding balances off on them. Also, using cash instead of cards would create a sense of what is a necessity and how to spend money consciously. 

Make Credit Card payments within its due date, rather than paying them later on. It can add to the debt that one has to pay off, by increasing the interest.


3. Managing Overdraft

It is necessary to have regularly updated information about overdrafts. This can provide an insight into the various fees and charges.

As a poor understanding of the fee structure can lead the person to use overdraft excessively, without understanding its consequences.

It’s beneficial to use online services as compared to paying others or receiving payments by checks.

It would be helpful to avail the alert services offered by banks, which sends a warning message when you reach your overdraft limit.

Overdrafts are beneficial for short term borrowing. Interest associated with overdraft usually is higher and can cause unnecessary debt.


4. Control Expenses

The first step in managing expenses is to understand which expenses are necessary to incur, and which are unnecessary.

Devising a monthly budget would help in identifying those expenses which are necessities, and which are luxuries. Switching towards energy-efficient sources can help in reducing the energy bill and being sustainable.

Consuming food at home can be less costly as compared to eating out all the time, which is also something not healthy.

Paying off debt as soon as possible is necessary to control expenses. Also, if it is not a dire need, we should not use the credit card at all.



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