As the old saying goes, "the difference between the poison and the drug is just the size of the dose." A loan can be a great help in difficult times and sometimes debts are needed to seize good opportunities. However, there are many people accustomed to overdoing credit card, overdraft, or grocery shopping.
If you have ever tasted this bitter poison, you are likely to be afraid to take out a loan to pay off Debts. By following the steps below, you will find out whether to leave the fear aside and use this feature as a solution for your case!
Do a survey of all your debts
The first step in getting your debts settled is to know exactly what and how much you owe. Choose the tool with which you have the easiest use (notebook, spreadsheet, expense control application, etc.) and record the name of each of your creditors, the amount of each debt, the due dates and the interest rates that are being applied.
Raise available resources
The next step is to list and organize the resources that you have available to pay off the debts.
Start by recording your monthly income. Be wise and do not count on recipes that you are not sure you will receive. Subtract from your net income your monthly expenses, after all these amounts should already be committed to your budget.
Also record the values you have in savings and other investments and note the yield rates for each of them.
Prioritize the payment of debts
Now that you know how much money you have and what your debt is, consider using your investments to pay off the most expensive debt, especially if you are late. If the investment income rates are lower than the interest rates on the debts, it is worth using them to affect the settlement of the debts.
But if you do not have funds saved, you'll probably fit into cases where it's worth borrowing more expensive debts. To be sure, pay attention to the next tip.
Evaluate a loan to take out expensive debts
If your debts come from the overdraft, credit card or direct credit, most likely they have very high interest rates.
In these cases, it is a good option to take out a loan with lower rates, such as payroll loan, real estate refinancing or personal loan. Just assess whether the Total Effective Cost (TSC) of a new loan will be less than the debt rates you already own.
If so, take a loan in the total amount of your debts to make the so-called "debt consolidation".
With the money in hand, either from your investments or from a loan, do not immediately pay your debts. Rather, try renegotiating them with your creditors, especially if they have already been outdated for a long time.
Also talk to your creditors to try to get better terms to anticipate the repayment of loans and debts that have not yet expired and can pay less.
Avoid getting into debt again
When getting a loan to pay off debts, be sure to use it to actually take them out. Do not fall into the temptation to use the values to feed bad consumer habits, further increasing your debts.
Take the opportunity to reduce your household spending and avoid falling into the red again!
Posted on October 06, 2018 at 01:24 PM