DEBT as describe by Investopedia in their website is an amount of money borrowed by one party from another. Nowadays, people use debt as a method for making large purchases that they could not afford to pay in one time, for example buying a car, house and etc.
According to statistic from Malaysia Department of Insolvency, percentage of bankruptcy by youngster has increased every year and it is recorded that 47 percent from a total of a 4568 new cases recorded last quarter had been declared as bankrupt.
Seeing this surprising event, as a youngster we should manage our money well to avoid expenses that more than our budget. Here are few simple steps that we can try to manage our debt:
- You have to figure out who and how much you owe and write it down. Based on your list, rank it from highest to lowest interest rate OR priority. You can also pay off the smallest debts first to clear up some of the list and it can be a good motivation to us seeing part of the debts is already paid off.
- Next, figure out the total amount you can afford to pay every month. You have to pay your monthly expenses first which is more important such as food, house rental and etc. Use the leftover from the amount of necessary expenses to spend on your debts. Now, you can pay the minimum amount for each debts on every month and once the #1 is done, you can use the budget to pay extra on your #2 debts.