8 Tips to Reduce Your Debts
This sum includes all the household debts (mortgage, car loans, student loans, credit cards, etc.). Of this sum, a specific part is made up of good debt such as the mortgage, which constitutes an investment. The other part, meanwhile, is made up of anything that depreciates like a car or spending on credit cards.
Julie Robert, Senior Director, Payment Solutions at National Bank, explains that often people get into debt because of a lack of knowledge of balanced financial management. According to her, the key would be education. So, to equip you, we have put together eight tips that will help you reduce your debts.
1. Start now
The longer you wait before creating your debt repayment plan, the more the debt will grow. As these interests accrue, the actual cost of your purchase will increase. Start paying off your debts now, so you don’t have to pay avoidable costs.
2. Keep an eye on your daily expenses
If your lifestyle does not allow you to repay even the minimum payment of your debts, you should review your habits. Take the time to think about ways to cut your everyday expenses. To help you, write down everything you buy for a month, and in the end, you will see what could be changed.
In addition to keeping close track of your daily purchases, there is also a list of things you could consider to cut back on expenses.
3. Avoid “buy now; pay later.”
According to Julie Probert, to avoid debts, it is better to stay away from the “buy now, pay later” payment formulas. Often these promotions have the effect of giving buyers the impression that they have money that they do not have. Consumers, therefore, spend more than their means allow, which adds to debts.
4. Always pay off the minimum for each of your debts
The consequences of forgetting the minimum payment on your debts are far more significant than just increasing the deficit. Failure to pay your credit card minimum balance repeatedly can seriously affect your credit rating, which will make it harder for you to borrow money in the future.
5. Pay off more significant amounts on high-interest debts
Prioritize the debts with the highest interest rates. You will, therefore, eliminate the debts that cost you the most in interest, which will decrease the amount you owe more quickly. Julie Robert explains that by doing so, you will recover your financial capacity, which means that you will have more money to put on your other debts.
6. At equivalent interest rates, prioritize debts of lower value
It’s just for motivation. A similar interest, you should focus on the debt that represents the smallest amount. Seeing your debts disappear will motivate you, and you can then tackle the more significant pieces. Also, closing a mortgage is suitable for your credit report.
7. Consider the consolidation loan
A consolidation loan is a loan granted by your financial institution allowing you to repay all, if not the majority, of your debts. This makes it possible to centralize the amount to be paid so as not to forget a payment. Still, the primary advantage is that the interest rate of a consolidation rate is often lower than that of credit cards. On the other hand, you must act quickly if you are no longer able to pay your debts because a bad credit rating will harm your chances of obtaining a consolidation loan.
8. Build a personalized repayment plan
The best way to get a customized repayment plan is to talk to your National Bank professional. He can guide you in achieving realistic goals as quickly as possible.
For help on your debt relief or payday loan debt relief you can visit online.