This time of the year when Eater celebrations make us think of the miracle of resurrection some people are hoping that they themselves will experience a miracle, one that will help them enjoy a full recovery from the problems of debt. Unlike many other things in life, debt is a predictable phenomenon that does not need a miracle to be brought under control.
Debt Management Plan
If you do not know where you are going how can you ever get there? To achieve your desired goals with your money and debts, you need to develop a strategy. Lets say you wish to become debt free or at least free of lifestyle debts such as credit cards and personal loans. To achieve this you will need to make a commitment of reducing existing debt balances by an agreed amount every month until the desired result is achieved.
Prioritize Debts & Monitor Spending
You should start chipping away at the most expensive debt first and once that one is paid off move on to the next and so on. The savings achieved from repaying one debt n full should be applied to the next most expensive debt and so on. The progress may appear to be allow initially, however you will be able to build up pace once you get going. People who are carrying excessive debts need to look at their spending habits and work to alter these. Develop a budget to work out how much you have available to spend on other things after you set aside the required money towards debt reduction. Do not continue buying on credit as you will fix one problem and create a new one. Try to use either cash or a debit card. If you put your available weekly budget into the account linked to your debit card then you can not spend what you do not have.
Refinance for a cheaper deal
Look for an opportunity to speed up saving through refinancing or debt consolidation. However before accepting any refinance deal make sure that it will actually offer you the savings that you are seeking. Home loan refinance can save thousands off your annual interest costs. This money can then be directed into reducing credit card debt.
Talk to lenders
If you are experiencing financial hardship because of illness, loss of job or business you need to seek help. Lenders are required by law to help out borrowers who are struggling. However the request needs to come from you before you go into arrears on your loan. Once this happens, they may be less likely to trust you to maintain your loan in order or negotiate different payment terms.
Professional Advise
Some debt problems are too difficult to solve by yourself. You may need to seek professional advise to assist you with either establishing and sticking to a budget or negotiating payment terms with your creditors. Some services are free and others may attract a fee. However if you do nothing, nothing will change. Taking the first step may be difficult but just think of where you could be next Easter if you start doing something about your debts today.