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How to Balance Between Savings and Investments While Managing Debts?

The two pillars of property building and wealth management, which goes hand in hand throughout life, are debt management and investment planning. Both involve planning. While one planning revolves around managing debt and avoiding bad debt situations, another planning revolves around the accumulation of wealth and investment on properties.

Although both go in different directions and deal with opposite things, yet somewhere, they get interconnected, and one gives in a way to another. Sometimes debts when managed well give in a way to smart investments and property building. And sometimes the opposite happens, when attempts of property building give rise to big debts, and then your owned assets also go into the debt payment making you bankrupt. Therefore, it’s important to understand that it’s all in your timely decisions, which makes you a debtor, an investor, and a property owner.

The most important is savings

The most important part of wealth building and wealth management is savings. This portion can never be neglected. Through life, whether you go into debt or not, whether you invest in properties or not, you must keep on saving. Savings is the only means of quality survival after your retirement years, and even through life when you may meet unexpected bumps and situations. Every person must save at least 20% of their earnings in an ideal situation. But it does not always happen as it should, and people barely manage to save well.

How to plan for investments when you don’t have the whole fund arranged?

Investment is a life’s decision. What you invest today, would be giving you benefits in the longer run. Not just would you be the reaper of the benefits, but the coming generations would also be benefited. Hence, you must invest well, and make wealth through life as you get good opportunities. To start with you must do good investment planning. Make some points about what exactly you want to acquire, and where do you see yourself after the next 25 years. This way when you have a fair idea of what exactly to invest in, you may start detailed planning. And this plan must include considerations like:

  • How do you plan to manage for the funds for investment
  • If you do not have the lump sum fund then how do you plan to take a loan to make up for this
  • Do you have enough earnings to meet your expenses and the loan EMI which you would take for investing
  • After EMI payment and monthly expenses will you still be able to save some money for the future
  • By what time you plan to get out of dent to enjoy your investments

When you plan all this, you will have to make well thought decisions while talking to yourself.

When investments through the help of mortgaging are planned appropriately, then you must not have any problem in meeting monthly expenses, saving for the future, and paying loan EMIs. And one time will come that your loans will all be paid leaving you with your assets which you planned and paid for through the years.

How to deal with debt?

Sometimes things do not work as planned. Sometimes you go through hard times and debts may accumulate to the extent that things go unmanageable. And you need to get out of such situation tactfully too. That’s why an idea of how to handle unmanageable debts with planning is necessary.

Debt management can be planned in mainly two ways. One is when you accept the debt and your failure to pay and go for either a settlement or a bankruptcy filing. The other way is when you use another debt to solve the contemporary bad debts and get over the situation. But then again the choice to opt for a method depends highly on two things. One is your current credit score after you went into the bad debt. Another is your current earning which decides if you can manage to pay any reduced EMI for managing the debt, or you need to settle for paying low in the absence of a fixed good income. Study debt relief methods discussed in informative links like nationaldebtreliefprograms.com, and let bankruptcy be the last resort.

Understand the method of debt settlement

The method of debt settlement is simple and yet lengthy. Generally, people in debt hire an expert in debt settlement to talk to the creditor on their behalf. The expert tries to convince the creditor about your situation and negotiates for a smaller amount than the original amount you owe to settle the debt. If the settlement is finalized, then you pay that lower amount and all debt and charges against you are waived off, and the loan is settled from the creditor’s end. However, this process takes time as negotiations take several months. Also, your credit score gets deeply affected during the lengthy process when you stop all payments towards the creditor to keep them under pressure.

This method is good when you see that you cannot afford the EMIs on the slightest and can only afford to pay a smaller amount as full and final settlement to get over. Also, this applies when you know you will be able to pay the settlement amount on finalization and have funds arranged for the same.

Potential of debt consolidation

Debt consolidation is a potential savior against bad debt situations. When you have a few debts, and you cannot manage them and fail to pay them on time and realize that you are in a mess, then debt settlement is for you. The new EMI you pay towards the consolidated loan is lower than the cumulative amount you are paying every month towards the various EMIs.Also, the interest rates get lowered while making payments flexible for you through a broader tenure. All you have to do here is apply for a larger loan amount to pay off all old debts, and then start focusing on payment of this only one loan EMI.

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