Financial Literacy Part 2: Managing Debt
Every time you borrow money, you’re robbing your future self.
Going over your monthly fixed commitments, such as your mortgage, car loan, credit card balances, and so on. Then, in chronological order, start with the debt with the highest interest rate and work your way down to the one with the lowest interest rate. This is explained in detail in the video.
After that, compute your debt service ratio. Make sure your ratio is less than 35%.
A credit card can be extremely helpful in an emergency, but you must use it wisely. Make sure you’re paying on time and cutting costs to settle card payments.
Credit cards have the highest interest rates. In Malaysia, the rate ranges between 15% and 18% per annum. Paying off credit card balances is the final step toward debt freedom. This article will teach you how to read your credit card statement.
When you have extra money, you may want to invest it in order to have a better future.