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Now is the time to work towards financial health. It's never too early or too late to start improving your financial circumstances and working towards a better future.

Here are some tips that may help you understand all the dimensions of your financial health from debt, to budgeting, to rebuilding your finances so that you can keep track of your money and maintain a steady income.

Debt is a word that can conjure fear and stress just by saying it, but it doesn’t have to be that way. Understanding that debt is part of life and it can be managed will go a long way in managing your anxiety and creating a plan to tackle your debt.

The first thing you’ll want to know is your debt load – the sum total of all the money you owe. This is important as it may strongly affect the way you budget. Whether you choose to slowly or rapidly pay off debt, knowing this number may help you create realistic and measurable goals for decreasing your debt load.. To determine whether your load is more than you can afford, you’ll want to calculate your debt/income ratio by comparing the amount you owe to the amount you earn.

Follow these four simple steps:

  1. Calculate all your monthly debt payments. If you don’t have fixed monthly payments, you can estimate your monthly payments as 4 percent of the total amount you owe.
  2. Take your gross annual wages and divide them by 12; this is your monthly income.
  3. Take your monthly payments total and divide it by your monthly income.
  4. Move the decimal point two digits to the right to make it a percentage – that’s your debt/income ratio.

Another way to take stock of your financial health is to calculate your net worth, which is the total value of your personal finances.

Assets – Liabilities = Net Worth


Assets: Everything that you own, which may include your house, car, furniture – anything that’s worth money.

Liabilities: Everything that you owe, which may include your mortgage, credit card balance, interest, student loans and loans from family and friends.

Prioritising Loans

Though one size doesn’t fit all when it comes to debt, there are two ways to manage your loans. Consider the implications of your financial situation before choosing a method – then stick with it.

Debt Snowball Method – This method of paying off loans works by prioritising debts based on their size. By paying off smaller loans first, you’ll be able to pay off several loans earlier on, and your payments “snowball” as you’re psychologically rewarded. Many people feel more motivated to pay off loans if they can see visible progress.

Debt Avalanche Method – Paying off debt through the debt avalanche method means first making the minimum payment on each debt, then using any remaining money to start paying off the debt that has the highest interest rate. Once you’ve paid off your highest interest rate debt, tackle the debt with the next highest interest. Using this method can result in paying off debt more quickly while reducing overall interest rates.

Understanding your debt is the first step to regain control of your monetary affairs and take steps towards financial health.