Annual Check-up Time for Your Debt
15 May 2015
Posted in: Everyday Banking
When you have a good solid credit history, it enables you to qualify to buy the big things you may need, such as a car, with personal financing that allows you to spread the costs over time. When you watch and manage it very carefully, it can also help you achieve your financial goals and enable you to make major purchases such as a family holiday or a new home.
A healthy credit rating can often start with a good solid game plan to deal with any debt you may have. A good strategy is to review your standing in relation to your debt once a year. From here, you can develop a plan to manage it or readjust your current strategy. Even if you already have a good credit rating, double checking everything’s in order will always have its benefits.
Start with the low-hanging fruit
If you’re dealing with a few debts, a good place to start is by prioritising them. You’ll most likely want to prioritise these based on what have the highest interest rates.
If it’s the case that you have high interest debt on several credit cards, begin by paying off the balance that you can get down to zero the quickest. Ticking individual debts off your list will keep you motivated and make your feel like you’re making progress.
Save, save, save
If you can increase the level of surplus cash you have each month, you will be more likely to tackle a larger portion of your debt. This can be achieved by either decreasing your spending or increasing your income.
This may mean some short term trade-offs and going without certain luxuries. However, in the long run you’ll have more money to spend. A great place to start with this is to begin to prepare more meals yourself instead of eating out. There’s no need to give up all your favourite indulgences but sticking to a limited budget for these treats will definitely benefit you and your credit rating.
Reviewing your spending through AIB Internet Banking and AIB My Money Manager will allow you to see where you’re spending each month and what categories you could potentially cut down in. You may be able to identify items which you’re paying big for but maybe aren’t using, such as that gym membership or those movie and sports channels you never watch. You may also be spending too much on your monthly mobile phone bill and could save some money by getting a new plan better suited to your high usage of data.
Stay on track
If you put aside some time each month to review how repaying your debts is going, it’s easy to track your progress. Be careful of how you spend using your credit cards as adding to your debt while trying to reduce it can lengthen the process. If you do have to make a large purchase on your credit cards, consider paying it off as immediately as you can so you can keep your balance clear and not incur any interest.
For more information on how you can use our services such as AIB Tablet Banking and AIB Mobile Banking to help you get a handle on your debt, visit our website today. If you are not yet registered with AIB Internet Banking, you can register online here right away.
Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland.