4 Effective Methods to Manage Your Loans

Many Filipinos have the wrong notion when it comes to loans. It’s perfectly understandable since many have either been scammed or weren’t able to chance on materials that focus on debt management. 

To effectively manage your loan, it’s important to have a clear budgeting plan that will not only secure your consistent repayment but also allow you to enjoy further financial freedom. 

Here are four effective methods to manage your loans: 

Create a Budget 

Avoid digging your own grave. If you decide to get a loan, always prioritize setting a budget for your monthly repayment. Monitor where your money goes and ensure you’ve allotted enough for your loan repayment.   

Don’t feel intimidated to start using budgeting apps to help you monitor your weekly–even daily expenditures. These apps offer convenience and can help you assess where you need to cut back from to increase your savings. You can even set financial goals for any big purchase you plan to save up for.  

Pay On Time 

Stay on top of your payments. To do that, you can mark your calendar, post a sticky note on your wall, or set a reminder on your phone when your loan due date is. No one likes late fees and penalties. Not only can it blow up your loan, but it can also greatly affect your credit score and lower your chances for renewal.  

Make it a part of your financial plan to have “untouchable portions”, or a fixed amount that is dedicated for your loan repayment. One way to do it is to repay your loan as soon as you get your salary. This way, you won’t be tempted to allocate it elsewhere. 

Pay Yourself 

As much as you want to pay off all your debt, it’d be hard on you should an emergency and other unexpected expenses happen. That is alongside your day-to-day expenses that are keeping up with the current economic inflation. Part of having financial literacy is also making sure you still have savings with every paycheck that comes to you. 

Track Your Spendings 

Money can sometimes be like magic, if you don’t handle it well, it’ll disappear.  

Remember that when it comes to financial literacy, discipline is key.  

Consider trying the 21-day challenge where you practice the habit of logging your daily expenses until it becomes a habit. If you don’t know where you spend the least and most of your money, you’ll never know what you need to cut back on. 

When you start to see your monthly expenditure, it can help you evaluate whether you want to splurge on certain things. 

When it comes to loan management, always keep in mind that there is fruit in consistent payment. Not only will this keep your monthly dues at bay, but it also help you prioritize your expenses and enlarge your savings. Loans are not there to put you into further debt but are forms of investment that can help you reach your goals faster and have the additional resources you need for urgent situations.