“Debt - Bad Debt” is a significant issue in today's life, especially with the economic situation during the COVID era where every baht is hard to come by. However, you can prevent your debts from turning into bad debts by starting to adjust your financial discipline today.


1. Calculate your personal expenses against your monthly income.

            A simple way to think about it is to take your income, subtract your debts (monthly), and then subtract your savings, which will give you your budget for personal expenses each month.

            If your debts are too high and you find it hard to make ends meet, you should look for ways to increase your income and reduce personal expenses, such as cutting unnecessary spending. Additionally, find ways to reduce your debt urgently, like refinancing to lower interest burdens. If you still have some money left after paying off debts, set aside a portion for emergency savings.

2. List all your debts.

          If you have credit card debts, cash card debts, home loans, or car loans, make a table to record the type of debt, total amount, interest rate, monthly payment, and due dates for each debt. Starting with this method will help you see your total debt burden each month, allowing you to manage your debts effectively.

3. Find a systematic way to manage your debts that suits your style.

            If you have multiple types of debt, it is advisable to prioritize them by sorting from the highest interest rate to the lowest. Focus on paying off the debts with the highest interest first to eliminate large interest amounts quickly, while making minimum payments on smaller debts to maintain your credit score.
            If your calculated debt burden is still higher than desired, start negotiating with each creditor to request lower interest rates, extend payment terms, or reduce monthly payments. You might also consider refinancing by taking out a loan to pay off high-interest debts first and then gradually paying off the remaining debts to lessen the interest burden from multiple sources.


4. Identify the root causes of the "Debt - Bad Debt" problem.
            
           If the debt is for necessary expenses, such as home loans, car loans, or car insurance, these debts are usually large and should be kept under 40% of your monthly income. To reduce these debts, consider refinancing your home loan. If you are struggling to pay your car loan, it is advisable to negotiate with the finance company to restructure your debt, although this may come with higher interest rates.
           Debts arising from the desire to have things are a significant issue for many people. The best solution is to address your own behavior first by refraining from incurring more debt. Additionally, pay attention to managing your income and expenses appropriately. Importantly, if you still have a strong desire for things, consider finding additional income sources that align with your needs.

          Eliminating "Debt - Bad Debt" entirely at once may be challenging, but the most important thing is to stop incurring new debts and to gradually pay off existing debts with discipline and on time, following a systematic debt management plan. With this approach, you will be able to effectively manage "Debt - Bad Debt."