June 19, 2024

It is true that every business runs on credit. From the suppliers of the raw materials to the distributors of the finished goods, everyone functions on credit. But there is a lot of difference between credit and debt. Credit becomes a debt when it is not paid on time and in some cases when interest is added along with the non-payment, the outstanding amount increases to become debt. When such debt is ignored and let unattended for a long time, it starts to accumulate and reach a height which becomes unmanageable.

Know Your Position

Sit down with a spreadsheet and a pencil and lay down all your outstanding bills on the table, right from the amount you owe to others along with the amount that is owed to you. Write it down in a chronological manner starting from the highest rate of interest in both the cases. Number them accordingly. Write down all the details like the amount that is outstanding, the due date of payment, the rate of interest, the monthly payment amount and much more so that you can know your position at a glance.

Reframe Your Budget

When you are in debt, it is time to make sacrifices at present to secure your future. It is also time to know the difference between need and want and what effect it has made on your budget. Reconsider and reframe your budget carefully taking into consideration all those things which are necessities and separating those which are wants. Curb out those costs which you can do without currently. Make some alterations which would reduce the cost of your necessities even. For example having an office is a necessity but having an office is a super mall is a want. Forego it, take up a smaller one. You will see that this way you can save a fair amount of money which you can utilize for your loan payment.

Talk To People  

You should try talking to people whom you owe and also to those who owes you. Try to chalk out some effective plans so that you can pay off the debt and let people know about your plans and intention. Often you will see that people will come out with ideas, advice and even with some reasonable solutions. You can ask your creditors to lower the rate or increase the tenure and to waive some amount, maybe the interest. Talk to your debtors to early payments with maybe something extra which you can balance with your product.

Prioritize Your Debt

This is the most important aspect. Pay off those loans which carry a high amount of interest first in full. This way you will have more money in hand to pay off the next higher one and continue this way till you see all the debts are paid off. Remember to make the minimum payment for all the loans at all times so that debt does not get accumulated. You can click here to learn more about prioritization of loans.