Beauty Store Business

SEP 2018

Beauty Store Business provides solutions for better retailing! New products, industry news, savvy business moves and important trends affecting both brick-and-mortar and online retailers are included in each issue.

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Page 50 of 67 | September 2018 49 that charge the highest interest rates first while paying at least the minimum due on all your other debt. Once you've paid off your highest interest debt, pay down the next highest and so on. Other Debts: Don't borrow money against your home or your 401(k) to pay off business debts. What may seem like an easy solution could cause you to lose your home or your business, or undermine your retirement plans. Beware of Debt Consolidation: Avoid the temptation of companies that offer to "consolidate" your debts into one easy-to-pay-off loan. In many cases, this will do nothing more than add another layer of debt. While there are reputable nonprofit debt counseling agencies that may be able to consolidate debt and assist in better managing finances, there are also many disreputable agencies that are best avoided. Research carefully before taking this course for managing your debt. Avoid Taking on New Debt: Unless your debt load is manageable and under control, abstain from taking on new debt unless absolutely necessary. Talk With Creditors: If you are behind on any payments, contact the creditor and make it clear that you are working to catch up. Most creditors will be lenient with debtors who keep in touch and show evidence of making sincere efforts to pay off their debts. See if you can arrange terms that you can manage–perhaps smaller payments spread out over a longer period. Some creditors are open to the possibility of negotiating to lower interest rates. In the case of a heavy debt load, that's always worth a try. Avoid Aged Payables of 60 Days or More: Payables of 60 days or more will almost certainly lower your FICO credit score, which in turn will limit your ability to borrow money and prevent you from getting the best terms from suppliers and vendors. Make every possible effort to pay all bills within 60 days of receiving them. Prioritize Debts: Rank your debts in the order that you want to pay them off. If credit card debt is part of your debt load, paying it off first (starting with those with the highest interest rates) will usually be your best move. Credit cards often have the highest interest rates of all debts, so carrying a balance can be very costly. BEST TOOLS FOR DEBT MANAGEMENT Obviously, the best way of all for manag- ing debt is a conservative and disciplined approach to credit before it becomes unmanageable. These tips will help to achieve that goal: 1. Start with a system designed to keep track of how much you owe at any given time and to whom. 2. Never fall into the trap of paying bills late–that is often the beginning of a downward spiral. 3. Some bills, credit cards for example, provide a "minimum payment" due. Paying only the minimum payment on such bills exposes you to the often- oppressive interest rates charged by such creditors. Even worse is paying less than the minimum payment. This can be a financially catastrophic failure. 4. If possible, create an emergency fund to fall back on in the case of an unexpected bill. 5. Create a computerized monthly bill calendar with reminders of due dates for regular bills. 6. Sometimes, debt loads seem to take on a life of their own. If, despite your best efforts, you find yourself in need of help, consider visiting the National Foundation for Credit Counseling at for in-depth, personalized financial counseling and education. ■ William J. Lynott is a veteran freelance writer based in Jenkintown, PA, who specializes in business management and finance.

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