Managing finances is a must for all of us, especially for those of you who already have a family. However, managing family finances is often a problem, considering that only a few people can manage their finances to the fullest.
Not a few families in the United States are still having problems managing their finances, including debt problems.
Debt is one of the main problems that make a person fail to manage finances. Including consumer debt, such as debt to buy smartphones, shoes, clothes, and so on. There are many bad habits in managing finances that can make a person get into debt, getting deeper every day. If you are already in debt, then that person’s finances will certainly be disrupted.
Especially in times of crisis due to the current COVID-19 pandemic. Some families are in debt because they already have a lifestyle that is too high, or because of reduced income so it is difficult to pay their obligations.
Then if you are trapped and have difficulty paying instalments, what should be done in debt management?
Have a Commitment and Complete it Gradually
When you are committed or have the intention to really change your financial condition for the better, then you must strive to be free from debt. Because this will help you to be more flexible in managing all the money you have, including allocating it to various posts that are considered important, such as investments.
However, if you already have a number of debts in one of the finance companies or financial institutions, then inevitably you have to deal with it first. Even if it’s not all at once, you can settle some debts in stages, so your expense items won’t interfere with other financial expense items, click here.
In general, there are three indicators that can be done to overcome debt, which has entered an emergency condition, namely:
1. Know Your Debt Well
What it means to recognize is that you know the amount of your debt, and admit that the condition of the debt causes your mental condition to be disturbed.
The most tangible steps you can take are:
• Collect all bills to see if your current debt is overstated or not.
• Calculate all types of debt you currently have, from credit card instalments, Home Ownership Loans, Credit Cards and Unsecured Credit.
• If the total instalments per month are more than 45% of the salary you get per month, it means that you have the potential to get into debt problems in the next few months.
Another characteristic is that you feel increased fear and stress when debt instalments are due. If you experience such a situation, then it is clear that debt has trapped you, and it is time for you to take the right steps to reduce the debt bondage.
2. Recognize Your Current Financial Cash Flow Condition
The main situation that needs to be considered in knowing your financial ability is to look at the condition of your family’s cash flow, whether your cash flow is a surplus or a deficit every month.
If your cash flow condition is a minus, this is very worrying. It will be very difficult to be able to pay debts in this time of crisis. Because if under normal circumstances your cash flow is minus, especially in a crisis situation like today.
If your cash flow is in a surplus or balance, it does not make your financial indicators safe. In this crisis condition, a cash flow surplus that indicates a safe zone is if your cash flow surplus is above 30% of receipts.
3. Identify Your Assets
The following factor is a concern to determine your financial ability, is to look at the number of assets you have.
Try taking the time to:
• Calculate what assets you have?
• What is the nominal value of the asset?
• Is it possible to allocate these assets?
For example, if you own several cars or houses, but those assets are still not paid off, then they are not realizable assets.
Look for assets that are not dependent on debt, but which can be purely allocated into cash, such as jewellery, gold and others.
If it turns out that you don’t have assets that can be allocated into cash, then it’s time for you to be careful about your debt. The worst possibility is that you lose your assets which are still in debt at this time.
However, there is one more way that you can save your outstanding assets, namely by debt restructuring and refinancing.