Tuesday, 28 November 2017

How to reduce your debt using simple steps

When you have a lot of debt, it can take a toll on your ability to make purchases on things you want now and in the future. Getting a hold on your debt can seem like a never-ending and daunting task. However, there are many steps you can take to start reducing that debt and getting a better hold on your finances. It is time to take control of your debts and get your the future of your finances under control.

1.Take Note Of All Debts

The first step to getting your debts under control is to fully understand how much you owe. Make a detailed of all of the creditors you owe money to. Each bill should include the name of the creditor, the total amount you owe them, the minimum monthly payment, the due date and the interest rate.

2.How Much Can You Pay?

You should also take some time to add up all of the monthly expenses you have. These can include things like rent, mortgage, utilities, health insurance, car insurance, food and more. If you can, you should also figure out about how much you typically spend each month on clothing and entertainment. Once you have all of your expenses covered, you will know your full budget and how much you can set aside each month to pay towards your debts. If you have the ability, you should also try to find a little bit each month to set aside for savings.

3.Speak With Lenders

If you can, call all of your lenders and explain why you are in your current situation. They may be willing to work with you and lower your payments or the amount you pay in interest. Some creditors will help you by waiving some late fees to help you get back on your feet and catch up with your payments. If your credit is decent, you might be able to apply for another credit card with a lower interest rate to transfer your balances to. This is not a long-term solution. However, it can help to save some money on interest in some scenarios.

4.Start With A Target Bill

There are two ways to start tackling your bills. For some, they want to choose the bill with the highest interest rate and pay that one off first. This can be a great way to save on interest in the long run. For others, they want to pay off the smallest bill first and then work their way up. With one option, you will save more money overall. With the other option, you will begin to pay off debts quicker. The choice you make will depend on which option keeps you the most motivated.

5.Loans

Another option when you have decent credit is to get a loan to consolidate your bills. Even if you don't have great credit, you can get a loan for bad credit to help consolidate all of your bills together. For many people, having one single payment to make each month makes the stress of debt a lot less. For most, there are different options available that will work and finding the right one for you can take a little bit of time and effort. However, loans are a great way to get all of your bills paid off easier.

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