3 Tips for Managing Debt
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Repaying debt can be an intimidating and seemingly insurmountable prospect, but it doesn’t have to be this way. A well-constructed debt management plan is essential in achieving financial stability and reaching your financial goals. To help you navigate this process, here are some tips from Ascend on how to effectively manage your debt.
Determine your debt-to-income ratio:
Debt-to-income ratio (DTI) compares how much you owe each month to how much you earn. Specifically, it’s the percentage of your gross monthly income that goes towards payments for rent, mortgage, credit cards, or other debt. To find your debt-to-income ratio, try out Ascend’s DTI calculator. There’s no hard-and-fast rule here, but generally speaking, the lower your ratio, the easier it is for you to pay your monthly bills.
Pay more than the minimum
By paying more than the minimum, you can significantly reduce the amount of interest you pay over time and become debt-free faster. Additionally, making extra payments shows lenders that you are responsible and capable of managing your debt, which can lead to an improvement in your credit score. It’s important to note that while making extra payments may not seem like much, they can add up over time and make a significant difference in the long run. So, prioritize paying off debt and make it a priority in your budget.
Consider debt consolidation
If you’re bogged down by several high-interest debts and you find it difficult to manage them all, you may want to consider consolidating your debts into one low-interest loan. There are many factors to consider when choosing to consolidate debt. Check out our article on debt consolidation to further explore if this is the right option for you.
Managing debt can seem overwhelming but with a well-planned strategy, it can become achievable. By determining your debt-to-income ratio, paying more than the minimum, and considering debt consolidation, you can take control of your financial situation and reach your financial goals. For more information on personal loan products to help with debt consolidation, visit Ascend's website or check out our educational resource on debt management. Start taking steps today towards a debt-free future!