Debt Effects – Making Sense of Cents

Let’s face it – with the rising inflation and cost of living, it’s not unusual to find oneself in a debt trap. Unforeseen circumstances like a salary cuts, job loss, delayed receivables, can make it even more challenging for borrowers to manage their big-ticket debts such as a Home Loan. According to a survey, three out of every five UAE residents are debt laden.

In such dire times, the right financial help from Debt Management experts like Freed Financial Services can make all the difference! 

The Negative Effects of Debt

While mindful borrowing is not harmful, there can be a situation where one is unable to manage Debt, and this can take a toll on an individual’s personal and financial life. 

Let’s take a look at some of the implications debt can have on a borrower, if not managed properly: 

 

  • It can hurt the borrower’s credit score

          If the borrower owes more than he can repay to the lender, it can negatively affect his credit score. Any default on a loan repayment is reflected on the borrower’s credit report.

  • It can prevent the borrower from reaching their financial goals 

          A large debt can keep an individual from achieving financial goals like education, retirement, etc.  

  • It can lead to stress and serious medical issues 

         The stress of not being able to clear or reduce the debt payments can impact the borrower’s health and well-being. 

Tips to Manage Debt Effectively

To avoid the above-mentioned negative effects, it is important to manage debt properly. Here are some tips:

Assess the financial situation

Before starting to figure out how to pay off debt, It is vital to assess the finances by maintaining a cash flow position. Doing this would help in prioritizing repayments as per the interest rate on each debt.

Pay high cost debt first

It is recommended to pay off the debt with the highest interest rate first. If your Home Loan has a low interest rate, it might be wiser to invest your money than put it toward prepayment of the Home loan. 

Consolidate the debt

Too many loans can be hard to track. So a way to ease handling several loans is to consolidate them into one loan. This way, the borrower will have just one EMI to pay off and could help them trade a high-interest loan with a low-interest one. 

Increase the EMIs and repayments

When weighing your budget, look for ways to aggressively paying down your debt. To get out of a debt trap faster, the borrower must increase the amount that needs to be repaid by at least 5-10% when the income increases. 

Seek professional help

Last but not the least, the borrower should not shy away from taking professional help from Debt Management experts and agencies like Freed Financial Services that specializes in Debt Management. The experts can help the borrower by negotiating better terms with banks to pay off the debt faster.

Why FREED

FREED Financial Services is an exclusive Mortgage Debt Management company whose experts can help individuals manage and pay off their Home Loan debt by providing suitable solutions based on each individual need. With over 40+ years of management experience in the Banking and Real Estate segment, FREED assists the borrowers to close or moderate the Home Loan liability by offering remedial measures such as settlement or restructure. 

Call at +971 4 3691880 or email at info@freeduae.com to know the options best suited for you.