10 Steps To Manage Your Debt in 2019 For Consumers
It can get very difficult for some people to handle their finances and pay off what they owe. Which is why they often fall into debt as they’re trying their best to make a living and survive as well. To break free from your debt with ease and make 2019 your year, take a look below at 10 of the most helpful and useful tips to handle your debt in our modern-day and age.
Choosing the right company to help you
Most people live their lives without the help of lending companies are working with one that offers questionable deals. If you want to manage your debt right, you have to negotiate for deals that suit you as well as having affordable interest rates. According to the people at Accredited Debt Relief, the minimum debt required is 7,500 dollars and the debt reduction fees can range from 15% to 25% of the enrolled debt. So once you realize you can’t handle it alone, it’s good to ask for help and get the assistance you need from lending companies. Choosing the right one will help prevent bankruptcy listed on your credit report.
Try your best to never miss any payments
You cannot afford to fall behind on your scheduled payments because that would lead to a lot of penalties that would keep accumulating. That’s why you need to be smart with your payments and never miss one because this would eventually make you pay even more money in interest. If you find yourself constantly having trouble with your monthly or yearly payments, then something is wrong with your payment plan. Come up with a new plan or negotiate one with the company assisting you, and stick to that plan for an easier life without debt.
Planning your budget to cut unnecessary costs
Another important thing that you should start doing is monitoring what you spend money on, there must be some things that you can cut from your monthly expenditure. Sometimes it’s good to get the things you like, but are they necessary things that you need? When you save more money for debt payments and work on paying it faster, then you’re more likely to get out of debt sooner. It’s dull and annoying, but you need to do this to fix your financial woes. Your budget should be realistic and you should limit spending on unnecessary purchases to devote more money to your debt reduction plan.
Don’t mix debt with your saving’s plan
One mistake that some people do is not saved for the future with money left aside, even though you have debts to pay it’s still important to have protection in the long run. You could miss out on good retirement plans from your employer, for example, like a 401K plan, since you focused too much on making your debt payments. It’s okay to have a certain balance between them, it’s your own, personal choice at the end of the day. But it’s highly recommended not to neglect your financial goals and savings.
Have you considered refinancing your loans?
Sometimes you can resort to getting loans because it can be very difficult to continue payments alone. Maybe your current lender or company isn’t working out for you, whether it’s because of interest rates, inflexible plans, or not enough cooperation from their end. Refinancing your debts would basically mean you start working with a new and different company that has the ability to pay off the remaining balance amount due to your old company. Then the new lender would transfer that balance to a new loan that would be much easier for you to live with. You would negotiate together on the new set of terms that would make your interest rate lower. So your payments won’t be as hard as before, and the quality of service would probably be better than the service with your old lender. This will make it less of a hassle for you and will make you pay off your debts faster.
Be more organized by making a list
Most people can get overwhelmed and lost with all their debt because most of the time it’s not directed to one place or person. When you list things in a clear and uncomplicated manner, you see exactly what you owe, who you owe it to, and it will remind you of the payment day dates. This helps you to develop the most effective debt repayment
strategy since you have a clearer, big-picture view of your debts and finances.
Find out what your debt-to-income ratio is
Most people forget about this, even though it can mean a lot with your financing. When you know your debt-to-income ratio, you could easily determine if your debt could get you disapproval from any future money borrowing/loans. It compares the amount you owe to the amount you earn, so you can make two comparisons; total debt balance versus annual income and total monthly debt payments versus monthly income. It’s really important to do this and shouldn’t be skipped.
Focus on your hardest and most expensive debt first
There is another way where you can effectively get out of debt faster, it’s by paying the minimum payment for smaller debts but paying everything for the bigger debts. When you choose a debt that is larger than the rest and one that has the biggest interest rate, that means you would put in all your effort and money in order to pay it off faster. And that way, you would focus on the little debts afterward with ease.
Have only one car
Some households or families have more than one car, in times of overwhelming debts, it can be difficult to maintain all of these cars. When you limit yourself to one car, you could possibly save a lot of money, meaning more effort and money devoted towards debt payments. It’s a very difficult decision and it needs a big family meeting for it, but it can mean a lot for the entire family if you sell your extra cars for more money to fix the debt issue.
Find smarter ways to handle payments
There are certain ways to help you pay less money on interest; if your lender allows it, you can adopt one trick that would make your life much easier. If your payment plan is monthly, you could try paying off half the amount due but once every two weeks. That way, in the months that have five weeks instead of four, you would actually pay one and a half times your usual monthly payment. Which would lead to paying less for the overall interest, and your loan would be paid off in a short time. You would save you a lot of money if you can possibly do this trick.
A lot of people tend to overthink and panic when it comes to debt payments, it’s okay to be cautious but still be smart about it. Think calmly and rationally and choose the right plan and strategy to carry it out. Hopefully, soon you can break free of all your debts.
July 16, 2019 - 6 min read