According to VTsIOM – 57% of Russians admitted that they have one or several outstanding loans – this is twice as much as eight years ago. Regardless of whether your debt is a consequence of a student loan, card, mortgage, medical loan or car, any form of debt may seem endless.
However, if you think that it is impossible to get yourself out of debt, then you are mistaken. You just need to make a plan to ease your way out of a difficult financial situation. And before you become a person free of loans, you need to understand what you are dealing with. To do this, you need to collect information about all your debts, which will help with the answer to the question of how to get out of debt.
• Your latest data on any outstanding loans and debts, including student loans, medical bills, etc .;
• credit card statements;
• Your credit report, which you can receive directly from the bank or issue paid and free subscriptions to third-party services;
• Your credit rating.
The last point is necessary so that you can find out if you have the right to combine loans, low interest rates and other benefits. Once you have collected all the necessary information, follow the step-by-step guide to pay all debts. Use these debt strategies to get the long-awaited zero balance..
Find out what your debt is.
Having a clear idea of how much you owe and to whom, you can more rationally approach the solution to the problem and even make debt more manageable. Make a list of all your debts, which includes the following:
• The name of each lender or the name of the credit company;
• The exact amount of the debt;
• Interest rate on each loan;
• Minimum monthly payment for each loan.
Your credit card statements also show how much you will need to pay each month to pay off all your debts within three years (usually a consumer loan is provided for this period). Include these metrics in your list..
Lower your interest rates if possible
With high interest rates, your debt will continue to grow very quickly, and this slows down and complicates its repayment. One way to lower interest rates is to transfer funds to a credit card to another bank (if your credit rating allows), where the annual interest on the loan is much lower than what you have now.
Another way to lower your interest rate is to call the lender directly or the company whose credit card you are using and ask for a reduction in interest rates. If you are a long-standing and good customer, they can lower your bids as gratitude and appreciation for your loyalty to them..
Finally, you can use credit consolidation: combine all your payments on all credit cards into one payment with a lower interest rate. However, keep in mind that a long loan term means that you will pay interest for a longer time, and this may ultimately cost you more. Carry out the necessary mathematical calculations before the operation to make sure that the consolidation is worth it.
Calculate your total monthly payment
Return to your compiled list. Add up all monthly repayments for each credit card and add monthly repayments for other debts. This is the total monthly payment that you should strive to make regularly. If you can’t calculate the monthly payment yourself, use loan calculator. To calculate, you need to enter: loan amount, loan term and interest rate.
Create a detailed action plan
Once you know what your total monthly payment is, determine how realistic it is to make it every month. If this monthly payment is not possible, make an appointment with a bankruptcy lawyer or contact your credit counseling agency to determine your next steps..
If you can make monthly payments or are able to reduce unnecessary expenses in your budget, follow these steps:
• Choose which debt to pay off first (if you have not consolidated loans). In most cases, you should focus on paying off credit card debt, because interest rates in this case are usually higher than interest rates on student loans, car loans, and mortgages. Make credit card debt or any debt with the highest interest rate a priority and spend most of your money to pay it off.
• Consider setting up automatic payment of minimum balances on all other debts.
• Try to pay off as many priority debts as possible during each month..
• Once your priority debt is paid off, select another debt to focus on, and follow the same steps until you pay off all debts.
Track your progress
It is important here to monitor your repayment progress every month. So you can make sure that you are tracking your goals and go towards them slowly, but surely. After one debt has been paid off, turn your attention to the next priority debt until everything is paid in full. As you go through the repayment process, you must:
• Keep track of your credit rating to see when it improves. Your credit rating is a good indicator of your financial fitness..
• As soon as possible – transfer the balance to another suitable card or consolidate loans if you did not do this in the previous steps.
If you can always strictly follow the described action plan, you will quickly pave the way for yourself and your family to live without any debts. If it seems to you that you need additional funds to pay off the growing debt, consider spending more hours at work. You can find a part-time job, get a second official job, make your hobby paid or just ask for a raise. In addition, you can always take one-time projects on the side to earn a little extra money just to pay off your current debts.
Similar articles
- How to refinance a loan and make debt more profitable
Refinancing helps the borrower reduce the financial burden and get better conditions for paying debt. Knowing how to properly refinance a loan,…
- How to invest when there is debt – step by step instructions.
If you want to start investing money, but at the same time you have loans, the legitimate question arises about how to invest, when there are debts, where…
- How to lend money and get them back.
The transfer of money for temporary use (on loan) is in most cases carried out between acquaintances and close people who do not burden themselves with legal…
Getting out of debt can be a daunting task, but with a clear plan and determination, it’s definitely possible. Have you tried creating a budget to track your expenses and identify areas where you can cut back? Additionally, consider consolidating or renegotiating your debts for lower interest rates. Are you aware of any government assistance programs or nonprofit credit counseling agencies that can provide guidance? Finally, are you exploring ways to increase your income? Asking these questions might help you find a suitable walkthrough towards becoming debt-free.
Yes, I have tried creating a budget to track my expenses and identify areas where I can cut back. It has helped me prioritize my spending and save more towards paying off my debts. I have also considered consolidating my debts to lower interest rates and have reached out to nonprofit credit counseling agencies for guidance. I am actively exploring options to increase my income, such as taking on a part-time job or freelancing. I believe that by implementing these strategies and staying determined, I can work towards becoming debt-free.
Can you provide some practical tips or strategies for someone struggling with debt? It would be helpful to have a step-by-step guide or a detailed walkthrough on how to get out of debt.