How can you manage your personal debt and business debt?`
Carrying debts can hurt your finances and it can hold you back from fulfilling goals in your life. It doesn’t matter whether you are carrying a personal debt or a business debt or both. Because whichever debt you owe, making interest payments is a common factor.
And if you are carrying high-interest personal debts like payday loans, your situation might be worse. Because carrying debts especially with high-interest rates means shelling out a substantial amount of your income for making the monthly payments.
So, it won’t be unusual for you to feel exhausted in managing your debts. That’s why we have listed some of the best tips that can help you to manage personal debt and business debt with ease.
Assess your debts
The baby step of managing debts is to assess them first. So, take two separate pieces of paper. And list all the personal and business debts that you have accumulated along with their respective interest rates.
Because the higher the interest rate, the more you have to shell out for making monthly payments. So, I would suggest you focus on the debts that have high-interest rates first. If you start working on paying off those debts, you will be able to save money in the long run.
Reduce your expenses
If you relook at your personal and business budget, you may come across many unnecessary expenses that you can reduce. By doing so, you can dedicate those funds to increase your monthly payments. The more you pay towards your debts every month, the faster you can become debt-free. Because if you extend your debt repayment period, you will have to shell out more on interest payments.
So, look for the categories where you can cut costs in your personal and business budget. For example, you can cut down outsourcing costs in your business. No doubt, outsourcing can help you to save your precious time. But you need to pay a hefty amount for that.
Besides, you can switch to digital marketing instead of spending money on TV ads or billboards. It can help you to generate traffic to your company’s website through digital presence by spending less.
In your personal budget, you can cut costs in many ways like limiting your expenses on dining out by cooking at home. Besides, you can switch to public transportation to save money on gas, parking, and maintenance. And you can stop swiping your credit cards and start using cash to control overspending.
Well, I have just mentioned a few points here. If you can go through your business and personal budgets thoroughly, you may find more categories where you can cut costs.
Increase your income
Let’s say, you have relooked at your budget. And you can’t find any such categories where you cut costs. So, the other way to increase your monthly debt payments is to boost your income.
You can grow your business and boost your revenue by increasing sales through new product launches or extending your business hours. You can establish your online presence by creating your company’s website. And creating a page on social media to make sure your business can be found online.
Also, you can introduce a customer loyalty program to retain your loyal customers. Since they have trust in your business, they are likely to spend more by opting for a loyalty program. And thereby, it can help you to boost your business revenue.
If you are doing a full-time job, you can start doing a side hustle in your leisure time. I would suggest you do a side hustle that fulfills your passion. It will help you to earn extra money and you will enjoy doing that job too. And if you are doing a part-time job, you can start doing multiple jobs to boost your income.
Consolidate multiple debts
Undoubtedly, managing multiple debts is a cumbersome task. So, you can consolidate your multiple debts into a single one. By doing so, you will have to make a single payment every month instead of managing multiple payments and different due dates.
Besides, you can save money on interest payments too. For example, according to a November 2020 report by CreditCards.com, the average interest rate of business credit cards is around 13.91%. So, if you have multiple business credit card debts to pay off, you can consolidate them by taking out a new loan preferably with a lower interest rate.
Likewise, when you are trapped with multiple personal unsecured debts like payday loans, it’s better to opt for debt consolidation. It will help you to manage your debts in a better way.
However, if you are not comfortable with taking out a new loan for consolidation, you can opt for consolidating payday loans by working with a reputable debt relief company.
The debt consultants of the company will try to negotiate with your lenders to reduce the interest rate. Once they agree, you can make single monthly payments to the consolidation company. And in turn, the company will distribute the amount among your lenders.
So, the bottom line is, managing your personal debt and business debt is not that tough. All you need is some effective strategies to manage your debts and get rid of them. And I hope the above 4 tips will help you to manage your personal debt and business debt in a better way.
Till then, don’t stop making payments to your creditors suddenly as it can make your creditors file a lawsuit against your business or you personally.