During the times of financial constraints, it is likely that we cannot do without debts. In fact, you might want to go for more loans in order to clear some of the debts or even to handle other worst situations. There are various ways in managing your debt to rid yourself of it faster. Here are some useful suggestions:
- You can make extra payments – When you owe much, the interest is higher and should you miss to pay, then you end up paying high on interest. Making regular payments or even extra payments reduces the amount of debt and saves you on the interest.
- Pay off home loan faster – Get a cheaper interest rate. You can do so by looking around for a home loan that offers a lower interest rate than your current loan or you can choose to have a commercial loan modification. Exercise caution when switching loans as some may cost you extra money.
- Retain the payment amount – When the rate drops, do not reduce the amount you were paying instead, retain it so that it will keep lowering your loan. Making extra repayments greatly reduces your loan by years and saves you a lot of money.
- Find out if there is a provision that allows you to make extra payments without attracting a fee
- Settle your credit card – As much as possible, try and settle all your credit card debt every month as this will let you enjoy the interest free period. However, if you only pay the minimum each month, you end up with more interest to pay and a longer period within which to settle it
- Deal with multiple credit cards – Start by settling the one with the highest interest first.
The following are suggestions on how to manage a situation where you fail to pay:
1. Do not assume the problem by ignoring it. Get all the advice you can on how best to deal with the situation.
2. Do not borrow money to settle your debts without carefully thinking it through.
3. If you lose your job or you are not at work due to illness, find out whether your payments are covered by protection insurance. Go through the small print of some of these policies before signing up. Make sure that you are claiming all your benefits.
4. Take care of high priority debts first like house rent payments to avoid losing your home.
5. Create a budget to help you know how much you need to put aside for debt settlement.
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