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7 Ways to Manage Debt

1. No more new debt: Sounds logical, but rarely followed. It is but common sense that unless you stop adding to your already mounting debt, you can't possibly hope to reduce your debt burden. So make a commitment not to borrow any more money...till you get your debt problem under complete control.

2. Debt Consolidation: Balances on your various credit cards and personal loans may be replaced by a single loan, to make the debt more manageable. There is lot more comfort in paying one loan than many loans and the debt reduction plan becomes more focussed. While doing so, you must also explore cheaper options such as top-up loans on your house property, loan against shares/mutual funds/insurance policies or low interest credit cards/personal loans to simultaneously reduce the interest burden.


3. Stop credit card usage: It is not easy to control impulsive buying. And credit card is the culprit here. Therefore, ideally you must stop carrying credit card in your wallet. Cancel the one you have or keep it locked (to be used under emergencies only).

4. Prepare a budget: You must have a monthly and annual budget - only then will you get the clarity on your finances. Without a budget, we often don't realise how wisely or foolishly we are spending our money. Budget gives a proper perspective, which is very essential in any debt reduction programme.

5. Negotiate with your lenders: Depending on the severity of the problem, you can negotiate for moratorium on repayment, extension of the loan tenure and/or reduction in the interest rates.

6. Moonlighting: The economy today offers many ways to make extra money in spare time. Giving tuition, selling insurance, preparing home-cooked food for students/office-goers, writing articles, selling your old stuff on ebay, data entry, web designing are a few of the many ways to add a few more bucks to your pocket every day.

7. Go back to basics: More often than not we buy things for show-off rather than utility. Consider replacing your smartphone with a basic model; switch from 3G to normal services if you don't need to download too much data; watch movies in the mornings/weekdays rather than on weekends; buy a hatchback car instead of a sedan if your family is small; go for the normal TV instead of a LCD/Plasma, etc. 


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