Rather than being buried by a pile of debt, most people like to stay on top of their debts and avoid unnecessary fees, high interest rates, and fees for late payments. Like people, FICO scores also prefer individuals that stay on top of their debts. Keep yourself and your credit score happy by following these three simple pieces of advice to avoid getting buried by debt.
- Get a Low APR
Your annual percentage rate, better known as your APR, is the amount of annual interest that you pay on your loan. There are many ways that you can achieve a low APR, but this facet will help you more than any other on this list. The vast majority of personal debt is not principal, but the interest that is accumulated by that principal. In having a lower interest rate, you eliminate that high amount of interest from becoming a bigger problem than it has to be. This low APR will help you be able to worry more about paying off the principal and will allow you to have a lower monthly payment, which will help keep the debt more manageable both in the short term and in the long term.
- Analyze Your Job
The counter to debt is income. There are multiple ways to increase your income, and one of those ways is to talk to some of your superiors and see if there is any way that you could get a pay increase. Perhaps they will agree to raise your pay if they see an increase in productivity or perhaps they recognize that you are due for an increase in pay. You can also embark on a secondary job as a freelancer or as someone part-time as well. Freelancing is a good choice because depending on your skill set, you are able to grow new skills or show off skills that you have always had, all the while setting your own hours and pay rate and working with the clients that you want to work with the most and networking like nobody’s business.
With modern business and technology, who you know rather than what you know is becoming increasingly more important, so working with as many different people as possible over the course of as many different vocations as possible would help you grow your human capital as an employee of the modern age.
- Keep a Rainy-Day Fund
Rainy day funds are most helpful for the little debts that no one sees coming and that are sometimes inevitable. While it is never a good idea to completely deplete your rainy-day fund, whenever your income for the month is low overall, you can always dip into your rainy-day fund to take what you need and alleviate some of that stress off of that paycheck so that it can go towards needed monthly expenses like groceries and utilities. These are also helpful for the occasional splurge, which is always nice even if you do have debts. Sometimes, people think that just because you have outstanding debts means that every dollar you own must work towards those debts at all times, but even the most indebted people deserve something nice every once in a while; don’t forget that.
These common-sense pieces of financial advice will help you be able to hold your head above water even when the flooding gets high. Living a life free from debt will enable you to have the financial freedom that you have earned, always want, and rightfully deserve. Managing your small revolving debts will also help you be able to pay off the debts that come with larger purchases, with which these tips will also serve you well.
