Financial Debt Management Tips For Low-income Earners.

In my last post about avoiding financial debt as a low-income earner, I did highlight six ways we can avoid getting financially indebted and live a debt-free life. However, it's almost not possible for a lot of persons to achieve financial freedom and remain debt free, especially in these days of very harsh economic reality that's currently plaguing most countries of the world.

It's basically for this reason that in today's post, we want to consider how you can manage your debt as a low-income earner, should in case you're already financially indebted, without getting yourself stressed up or depressed.

Paying off debt could be very tough, and could sometimes lead to frustration and depression, especially when you're not making enough money to be able to pay back. But don't worry, in this post, you'll get some tips and strategies you could use to manage your debt, pay off all you owed and subsequently live a debt-free life once again.

Let's consider these 4 debt management tips that'll help you to effectively manage your debt and quickly get out of financial incommunicado.

4 Financial Debt Management Tips For Low-lncome Earners:

There are four major tips and strategies I'd like to recommend to you, that you could use in managing and paying off all your debt, and subsequently live a debt-free life. Let's get started looking at them one after the other.

1. Have A Debt Management Plan:

Finance or 💰 money management goes along with planning. There can be no effective finance management, especially for a low-income earner like yourself, without a deliberate and well-thought out plan. Thus, when it comes to financial debt management, your first strategy in paying off all your debt, will be a very feasible and workable debt management plan.

A debt management plan is important, because it helps you to breakdown your repayment plan. That is, how much you'll be paying in installments, and how long it'll take you to fully pay off your debt.

Apart from this, there are more benefits of having a financial debt management plan. It also helps to reduce pressure on your part, which could lead to stress, frustration and perhaps depression. Plus, it makes your lender or borrower trust you more in being able to repay all your debt.

Your financial debt management plan must include:

- Your repayment strategies.

- Your repayment schedule, and 

- Your expected time of full repayment. Let's consider them one by one:

- Your repayment strategies: This basically means knowing or being fully aware from which source you're going to be repaying all your debt. You source of repayment must be known before time, and it must be already existing, and not something that you're expecting or tentative about. 

It could be your paid job, a business you run or even an asset you own, that can be monetized. But it must definitely be something that you can plan or work with, going forward. Your lender or borrower will also be confident about, so he or she will be willing to give you more time. Let's look at the next one:

- Your repayment schedule: This involves your time for repayment in installments if it's a large debt, and your expected time of full repayment. This plan makes you have an idea of the specific time you'd like to be paying a particular amount, it could be daily, weekly or monthly. It also gives you an idea of how long it'll take you to fully repay all your debt and become debt-free once again.

This plan is also very important to your lender or borrower, because they'll be less agitated, antagonistic and worried that you may not be able to meet up paying all your debt. It will also position you as a very wise and responsible individual who knows what they're doing. Finally, let's consider the last one:

- Your expected time of full repayment: This should be self-explanatory, as it gives you and your borrower an idea of the length of time it will take you to fully repay all your debt. For larger debts, it's wise and adviceable to give yourself a longer time for full repayment, so you don't get yourself choked up. Let's now consider the second tip:

2. Plan Your Expenditures:

There's no getting out of financial debt without a deliberate plan about how you spend or disburse funds. As a low-income earner, much more when you're financially indebted, it's a no brainer that you've got to be more careful in how you expend your finances. And this no doubt requires a very good and tactical plan of you disburse and allocate funds to specific needs.

It's for this reason that effective budgeting is very important. Budgeting will enable you to effectively and efficiently plan your expenditures. You'll know things that are very needful and expedient for you, and things that are less important, that you can basically do without. 

Through effective budgeting, you can cut down on your expenses and have more money or resources available to service your debt. The importance of finance budgeting cannot be overemphasized, as it's the easiest way to helping you save more money to pay off all your debt.

3. Set Aside A Particular Percentage For Debt Servicing:

This is obviously where the main action of repaying your debt takes place. As a low-income earner, no matter how tight your budget may be, it'll amount to selfishness on your part, and utter disregard for your lender or borrower to not consider or factor them-in into your budgeting plans.

It's for this reason that your repayment or debt servicing plans must be included in your budget. Don't just allocate funds to your needs alone, you must endeavor to put aside a specific amount for repaying your debt. 

For smaller debt, which you may be involved in, as a low-income earner, I'll advice you allocate an amount from your income or wage for daily, weekly or may be monthly debt repayment, depending on when you get your pay or calculate your income. Then you spread that small amount within a period of six or twelve months full repayment plan or schedule.

But for larger debts, you should also do the same thing, but I think you should give yourself a reasonable amount of full debt repayment time. It could be two, five or even a ten year repayment plan depending on how large the debt is. But a particular percentage of your gross income or salary must be set aside usually monthly, for debt servicing.

However, some lenders usually requires you pay a particular amount or percentage for debt profit even before you start paying back the real debt. Well, depending on the terms of your agreement with them, but it should not exceed a total of 30 percent of the amount you want to borrow. Now, let's consider the last tip you'll need to be able to manage financial debt.

4. Financial Discipline:

Financial discipline is everything. And it's the mother of all finance management and success tips you'll need to have as a low-income earner, who wants to pay off all your debt or become financially stable and successful.

No one can deny the positive impact of being financially disciplined when it comes to debt management or being financially stable and successful. However, this is often where a lot of people finds very difficult to cope with. Consequently, they get beaten financially, and fall flat to their face. The reason for this is not far-fetched as our individual temperament is, in a way responsible for this.

Persons of the sanguine temperament are more prone to being financially reckless and undisciplined because of their highly vivacious and extravagant lifestyle. But for anyone to succeed in debt management, live a debt-free life, and subsequently become financially stable and successful, the importance of financial discipline can't be taken for granted.

Conclusively, debt management is the processes or methods you adopt in order  to manage and pay off all your debt. For it to be effective, you must be deliberate about it. But following these few tips, will no doubt help you to quickly get out of debt, and subsequently live a debt-free life.

Thanks for reading. Don't forget to leave your comments, questions and also your suggestions on this post. Thank you 😊