Many people find themselves over in debt in the last 12 months as interest rates went up and inflation going up. Over indebtedness is because of reckless borrowing by consumers and reckless lending by banks and institutions.
The challenge is to get out of debt and be able to sleep at night again without worrying about your bank calling you about your debt and looking for answers to the problem.
Here are some simple steps to take to get control of your finances:
Reduce your spending. Cut out luxuries and spend wisely. This can take the form of doing little things, from taking sandwiches to work instead of eating out, to delaying the purchase of a big ticket item, such as a new motor vehicle. A motor vehicle is one of the largest expenses you might have and the finance is very expensive.
The second action you can take is to speak to your creditors nicely and renegotiate the terms of the contract with them. Remember to have an exit strategy. This will give you more power to negotiate with the parties concern. The bank can lower your interest rate, which can save you a lot of money over the term of the loan.
Pay off high-interest debt first, like credit cards. When you have different loan accounts, compare the interest rates and move all the debt to the lowest interest rate loan account. Â
As you pay off your store cards and credit cards you must close the account and tear up the cards.
Do not borrow money to pay off other debt.
Do not gamble in the hope of settling your debt the easy or fast way. It took you time to get in debt, it is going to take time to get out of debt. The odds of winning at gambling are very small. The odds of losing the money you have left is much greater and it will only making your situation worse.
When you find that you have money left at the end of the month, make additional payments on the highest interest loans. This will reduce the time you spend paying off that loan.
You must not be making new investments while you have outstanding debt. Always pay off debt before you start investing. Your best investment will be to pay off your debt. If you are paying off debt with interest of 20% per annum, you will have to find an investment that pays you 20% per annum after tax with no risk to beat paying off your debt. That is hard to find.
So there you have eight easy ways to reduce your debt and giving yourself help with debt. Alternatively you can find a debt counsellor to help you with debt review or debt counselling application.
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