Falling behind on your debts can be extremely stressful and makes it hard to feel good about your finances. And when you’re struggling to pay your bills on time, it can feel overwhelming. But there are things you can do to help you get on top of your debts.
The important thing is to start as soon as you can. The longer you delay, the costs of repaying the debt may increase, and it will be harder to get things under control.
7 steps to paying off your debts.
Calculate your current debt.
The first step towards getting on top of your debts is working out exactly how much you owe. Make a list of all your debts, including credit cards, loans, unpaid bills, fines and any other money you owe. Going through this process might be confronting, but it’s important that you understand how much money you owe – then you can plan for making your repayments.
List your minimum repayments.
Once you have a list of all your debts, make a note of the minimum monthly repayment on each one.
List your interest rates.
List the interest rates you’re paying on each of the debts.
Sort your debts.
Sort your debts from the highest interest rate to the lowest interest rate.
Make a commitment.
Commit to making the minimum payment on each debt by the payment’s due date.
Make additional payments when able.
If you have any money left over, use it to make extra repayments on the debt with the highest interest rate.
Consolidating your loans.
You can take the above approach to clearing all your debts, one at a time. But this process can be time-consuming and quite complicated.
Debt consolidation is another way to help you get on top of your debt repayments. This involves taking out a new personal loan and using those funds to pay off all your existing debts, leaving you with only one loan to repay.
When you consolidate debt, you know what your regular repayments will be and how long you’ll be making them, which can make repaying the debt easier and less stressful.
Before you decide to consolidate, check the interest rate and fees on the new loan. Make sure you can afford the new repayments. If the new loan costs more than your current loans, it might not be worth making the switch.
If getting on top of your debts seems like a daunting process, contact us to see how we can help you get started.