Rules of Debt Management

Borrowing money is a common practice among people of all categories, salaried, Businessmen others, particularly when they have emergencies, time-bound priorities to spend and exigencies. We know our cash inflow limits, even if it is fluctuating income. Money Management is one thing & Debt Management is a skill, developed in certain unavoidable situations in life. Before you decide on the best way to sort out your finances, get as much financial information together as you can. That way you can assess whether your problem is something you can deal with yourself or whether you need expert help.

Following some simple steps & ways, Debt Management is not very much impossible, as we initially think. Here are some hints:

1. Be your Money Manager: We always have some time to think and analyze before we borrow. Borrowing money without a proper Budgeting could be disastrous. After measuring our ability to repay the borrowed, we can budget our Borrowings with ease & less manipulation. Budgeting before borrowing always helps you to manage Debts better. We need not be carried away by easy loans or Credit cards, which come handy at the outset & costs us dearly later. If your budget plan shows that you have a problem, it's vital you know which debts to deal with first. Debts on payments that keep a roof over your head (such as your mortgage or rent) should always come first, as missed payments could result in bad results.

2. Know your Borrowing needs: People borrow for emergencies, non-regular expenditure like buying a Car, Plot, meeting your Kid's Education expenses or buying a house. Strictly avoid borrowing for household expenses. Try to live within your limits.

3. Avoid Borrowing for Petty Purchases: Before entering into a debt, make sure you are doing this for a long time need value. In case you make a loan for a short term need, you might end up paying for long. Debts might swell over your expenditure, as in the case of a Vacation.

4. Take care of your Minimum Payments for Credit cards: You may feel, minimum payment on an amount borrowed on a Credit card, surely costs you dearly. Most of the times, it might not cover the interest levied on your borrowings. The best way to avoid this leakage of your hard earned money would be to borrow less, pay faster. Do not heed to luring offers by Credit card companies increasing your borrowing limits.

5. Consolidate your Debts: Do not sweep your money into one pile. In other words, reduce your monthly payments & interests as far possible. This way is very helpful for borrowers from Credit Cards, as they have very high-interest charges associated with them.


Effective Management of Finances and Debts go hand in hand. It is a human tendency to decide to buy, when you have some money, filling the balance by availing Debt. But if you are your own Finance Manager, it is not very difficult to manage expenses & debts as well. You, at times, might go in for an expert advice, but you are the master of your Priorities & decide to know when you need to borrow. A little introspection in this matter goes a long way to easing this situation for a better & peaceful life, with no fewer Debts if not Debt-free.