you take on a debt, it is important
for you to assess your income and your monthly dues. Debts or loans are
you incur when you borrow money from lenders. When you borrow money,
you do not
only pay for the principal amount you borrowed but also the interest
charged with the loan.
loans can either be secured or unsecured loans. If you have assets,
you can go for a secured loan. A secured loan charges lower interest
because you have security deposit. The security deposit is known as
collateral. The collateral will be taken by the creditor as a repayment
loan incase you are not capable of repaying the loan as stated in the
loans offer lower risks for creditors therefore they are
willing to offer
lower interest rates and better payment schemes as compared to
You can also borrow larger sums of money for secured loans.
loans offer higher interest rates for debtors because they do not
require security deposits. Also, unsecured loans offer lower amounts of
to be borrowed. Examples of
unsecured loans are credit card debt, departmental cards and gas cards.
If you have difficulty assessing and keeping track of your debt, it is
important to keep a debt guideline. Debt guidelines are also needed by
to assess your credit worthiness. Your debt guidelines will state your
expenses, transportation, debt budget, investment, savings, food,
bills, doctor and dentist expenses, as well as clothing expenses.
Here is an example of a debt guideline:
Housing: Then state the amount of your housing payments. Ideally,
must not take exceed 35% of your income.
Transportation: State the amount you of your monthly car payments, gas
repairs, insurance and parking. Transportation expenses must not exceed
20 % of
Debt budget: This includes your student loans, credit card debt,
and other debt payments. Debt management must not exceed 15% of your
Investment and savings: This should take at least 10% of your income.
include stocks, bonds and the money you put in the bank.
Other expenses: This will include your food, clothing, insurance bills,
and dentist expenses. It should not exceed 20% of your income.
You must take time to calculate all of this. If you are spending more
category than the ideal, then you should start re assessing those
If you are spending lesser on other categories, then maybe you can
make sure that you are not spending more than you earn. Live within