The data on family economies that experts have been able to analyze for several decades show that a good part of the family economic setbacks are due to poor management of household income. Although there are factors extrinsic to the merely personal (economic situation, educational level, number of children) for the majority of families who are in economic or financial difficulties, who do not fall within one of the risk groups and who a priori have sufficient income, the main cause of encountering financial difficulties is overindebtedness.
In this article we are going to give you several tips to follow so as not to compromise your family (or personal, economy in the event that you are single without children). In this way, you can face unforeseen events much more efficiently and plan your finances in the longer term.
Do not dedicate to return debts more than 33% of your income
The economic difficulties in which we find ourselves when it comes to covering unforeseen expenses often lead us to request financing in order to maintain economic stability. One of those ways of financing is through a loan. One of the times of the year where the need for loans increases by almost 40% is in January, after the Christmas expenses – almost always poorly programmed – that make that month and the following ones require a push to bring back to our current account to positive numbers.
During the months of December and January, an average of 35% more loans are processed per day compared to other months of the year. However, experts recommend that our debt should never exceed 33% of our monthly income, and in the case of short-term loans, which are always somewhat more expensive, the recommendation is to never sign loans that cannot be return in less than three months.
Reserve and do not touch 10% of your income
Saving becomes an effective way to manage debts and contingencies in the long term. It is also a free way to self-finance. Saving therefore becomes a safety mat that prevents us from falling into the future over-indebtedness in which everyone incurs. When we over-indebted the available savings will allow us to cushion the blow.
It is not recommended to divide the debts
In lengthening the payment of debts well beyond the final term is not a problem but it is always advisable to have additional funds such as extraordinary pay or higher income. For example, if we have a debt of 2,000 USD and a fixed fee of 200 USD per month for 11 or 12 months and we add another 2,000 USD, the interest will increase and the final payment will last up to 25 or 26 months, more than two years. In these cases we must maintain control of the debts and plan all those expenses that we can in advance. Using a credit card is not the best option since the interest they offer is not the most competitive on the market.