Debt – this small word of four letters can bring big trouble to a person who does not know how to handle finances correctly. The current debt of Russian families amounts to trillions of rubles, and it looks like it is not going to decrease. But why do we have to borrow money so often and can this “habit” become useful?
When mortgages, car loans, credit cards, medical, insurance and other expenses come together, they can become a real problem. But not all debts cause only harm to your well-being. In fact, those who have learned to borrow money know that this can be beneficial for the budget. Remember, at least, why did you do it? In 50% of cases, you borrowed due to a difficult financial situation, but in the remaining 50%, the reason was a desire to achieve a goal. From buying a TV to improving credit history. Entrepreneurial people also know that without initial capital it is impossible to start their own business and they often turn to banks and Payday Loans for funding. And speaking of a credit score, many already know that their CI is a document that reflects their relationship to money and the financial system as a whole. Therefore, in the future, the quality of the credit history will affect not only the conditions for future loans, but also the promotion, rental of an apartment and much more.
The following signs indicate that you are properly handling money and your debts:
If you systematically check your credit history and see a positive trend, you are on the right track.
You constantly check all accounts and keep abreast. You feel comfortable because you make all the payments on time and do not increase your debts in vain.
Your total debt does not exceed 40% of gross income. If the monthly amount you owe is much less than the amount you receive – this is a good sign that you are using your debts as you need them. By the way, this ratio in various ways is trying to figure out the banks with which you work in order to know for sure what credit limit you can be granted.
You follow the balance of your credit card. If you periodically or constantly use less than 30% of what you have on a credit card, creditor credibility and your credit rating will grow towards you.
If all of the above describes your current situation – keep it up! If something from you described do not have time – do not worry, this does not mean that you have there is a financial problem.
You feel your finances are out of control. When you control your budget and you do not have to borrow money time after time, you feel better – and this is half the success. If you are not completely in control of all your finances, it’s never too late to start doing this.
You pay on debts not enough money. Everything is very simple – if you did not have time to make a mandatory payment on time or you made a payment less than the minimum payment – in some cases you will be charged a fine or will raise the interest on the loan. Such, perhaps even small, additional spending can snowball grow into another debt.
The same goes for the minimum credit card payments. Always try to put on the card more than required. Otherwise, open credit can continue for many more years, and you are so used to it that you stop noticing that you pay more each month than you could.
If these examples seem familiar to you, then it’s time to take up your household money and put the budget in order. It may take several months or years (depending on the complexity of the situation) to keep your needs in strictness, but you must firmly decide what is more important to you.