Debt has the ability to run you bankrupt. Irrespective of your income, poor debt management is hazardous. It is essential to consider your credit-debit ratio before going for that extra loan. Is that all? There’s so much that needs to be looked at when it comes to debt payment and the need to start building your account for the future. This article is going to give you tips to pay all your debt with a low income and start investing for the future. Read to the end.
Nothing comes for free when it comes to money. What does that mean? It simply tells you that for you to get anything, you will have to pay the price.
When it comes to money, the cost comes in terms of interest. That only applies if you pay your loan in time. In case you delay, there is another cost. You will be fined and made to pay penalties.
It starts there. The first thing to be cautious about is the cost of any debt. This is a vital tip. Avoid loans with high-interest rates, hidden charges, and with provision for penalties and fines. Be keen when reading the agreement forms. Read to the end, no matter how long the contract document is.
Do your homework well. Ensure you compare the costs of loans before settling for the fairest one. Click here for affordable loan rates. It is the easiest way to avoid trouble. If it is not a low-income loan rate, look away and walk away. It will mess your finances more.
Avoid piling debts. Adding more debts to yourself reduces your disposable income. Discipline means taking your urge to take more loans.
Before taking another loan, ensure you have finished paying your existing debt. As a low-income earner, your ability to repay debts is limited. Therefore, adding debts to yourself only worsens the already bad state of affairs.
- Keep track of your debts
Money has no shortcuts. You have to be accountable. With low income, your accounting game should be on a high.
Keeping track of your current debts allows you to plan well. You will be able to know how far you are with your debt settlement. This will also help you in maintaining discipline.
Having a record of your debts will even motivate you to pay fast your loans and clear with your lenders. You cannot afford not to have a record of your debts with a low income. It is hazardous.
It is possible to find free accounting software online. You may consider working with one for efficiency and effectiveness.
Putting your little money in a viable investment is a wise way of growing your fortunes. Although, you need to exercise caution, especially with the rise of conmen and Ponzi schemes. So, where should you put your money at?
- Fixed savings account
Banks and many financial institutions are more than willing to keep your money for you at a rate. This is where the power of compound rates comes to play. After a period of time, your money would have grown at a considerable rate.
- Stock market
Stock market trading is another safe and viable investment to enter into. The returns are not really high, especially for low-income earners. The only good thing is, the income is steady and guaranteed. This may serve as an extra income for you. In fact, it is an investment in itself.
- Investment bonds
Investment bonds are another financial instrument worth your money. You will never regret it.
- Real estate
The past century has seen the real estate business boom. This is another good investment you may involve yourself in. Again, you need to be extra careful to avoid plunging into conmen’s den.
It is believed education is the surest way to success. With a low income, the best thing you can do is further your education. It will boost your chances of a higher income and career advancement.
- Residual Income
Another easy way to get your debt paid comfortably is by finding a way to increase your income. It is not easy to have a salary increment at your place of work. So, how possible is it to have your income go high? Finding a residual income is the way out.
The wealthiest people in the world have more than one stream of income. While it is not easy to find one, it is possible. With a residual income, you will be able to pay your debt and be left with money to invest.
With two or more incomes, it is easier to plan. You could plan to put one income into a savings account. Then, choose to use the second income for your daily spend. Lastly, the third income could be used to pay debts.
- Avoid impulse buying
Impulse purchasing is the reason most of the world’s population is in debt. Do not be part of these statistics. The worst decision you can ever do is borrowing to consume. This mostly happens when people make impulse buying decisions, even when they do not have money.
If you want something, plan for it. If a purchase is unplanned, you’d instead not make the purchase. In the long run, you’ll find yourself in unnecessary debts.
- Live within your means
This is the basic rule of survival. Living within your means dictates you only spend what you have. Borrowing to spend is tantamount to spending what you do not have. It is unsustainable. In the end, all you will be doing is paying loans and penalties with nothing on your low income left to save or invest.
The Bottom Line
It is a rule of success to spend after savings. For low-income earners, that is next to impossible. The truth is, it is possible with proper planning. Even with a low income, you may have something small left to save after spending and paying debts. It requires discipline, proper accounting, and planning.