Do you have plans that are affected by debts that you bring from the past? Does a health problem affect your economy? Did you have an emergency that caused a change in your finances? These situations are just some of the many that can lead you to a financially complicated reality, but do not let it discourage you and condemn your economic future, today we are going to explain some ways to pay debts.
First of all, it is necessary to have perseverance, discipline and organization beyond the method. The first step is to list all your debts and include the amount you owe, the interest rate, and the payment term. This will allow you have a notion of the total amount of debts and help organize a plan in which you prioritize the payments that most affect your quality of life.
Once you have completed this step, the next thing is to put together a detailed monthly budget, which includes all your expenses and income. In this way, you will see where you are spending money and thus select in which areas to reduce your expenses. The latter is necessary; canceling subscriptions to services that you have not used for a long time, reducing eating out and reducing leisure expenses are the keys to success when talking about a financial plan that allows you to pay off your debts. Reducing ant expenses, defined as frequent and insignificant purchases, is one of the most viable solutions in these cases.
Once the latter is done, it is essential that you make additional payments on your debts. This will help you pay them off faster and reduce the amount of interest you pay in the long run. There is also the possibility of negotiate with your creditors for a more negotiable payment plan. Although it may seem impossible, many creditors may be willing to talk and create a plan that works for you to pay off the debt. If you have multiple debts with different creditors, consider consolidating them into a single loan with a lower interest rate. This is going to allow you to reduce your monthly payments and simplify your finances.
Paying more than the minimum on a credit card is a big help., since by paying only the minimum repeatedly, the largest amount of the payment only covers interest. The latter only means that you can go years without reducing the amount of debt. Resort to the minimum payment when you have no other option.
A similar method is by starting pay the most expensive debt, the difference is that the debts are ordered according to the one that pays the highest interest. In this case, you focus on paying off that debt first and for the rest you only pay the minimum and so on until you end up with the least expensive one. It is important to note that sometimes this method can take a long time and cause you to lose motivation, again it should be noted that the discipline and perseverance are key parts of the process.
The snowball method is a strategy popularly known as successful to get out of debt. What does this method consist of? In making additional payments on the debt with the lowest balance, while making the minimum payment on the other debts.
Use the snowball method
The snowball method is a popular strategy to get out of debt, it is a method created by the financial expert dave ramseyauthor of the book The total transformation of your money. It consists of making additional payments on the debt with the lowest balance, while the minimum payment is made on the others, this allows you to get out of debt in less time and in an ascending manner, since the smallest amount will be the first to settle and so on until you get rid of all of them. To the smaller amount of debt, add an extra value according to your ability to pay, if for example this is 13,000, add another 13,000 and thus pay double, managing to pay the entire loan in half the estimated time.
Once you’ve done that, add that amount to the amount you pay on the second debt each month until it’s paid off, and so on. If you have a home loan, we recommend not adding it to that list since it is not a debt, but an investment.
If getting organized becomes a headache, consider seeking professional help. A financial advisor can help you create a payment plan, negotiate with creditors and seek a return to reducing expenses. Today, with social networks, it is possible to find several who work freelance.
