Strategy to pay your debts

22 Oct

One reader – who will not be identified by the exposure – sent us the following question through our contact page: “I am totally in debt. To give you an idea, I earn a net salary of $ 3,900.00 and adding all the debts, even those that have been negotiated or that I am still able to pay, such as the payroll loan, the amount is $ 152,670, 65 This is the total value of both negotiated and non-negotiated debts.

I took courage and did this lifting and now, I keep crying. I am in despair, even knowing that this absurd amount will not be paid at once. I know some of them, including the highest ones, are being honored because they are debited directly to my salary or account.

I have already collected all the credits, monthly debts such as health insurance… etc and after reducing them, I have $ 1,000.00 to renegotiate the $ 152,670.65 of debt. What can I do right away?

 

Assume you really have a problem

debt loan

The first step was to become aware of the problem and seek help. And that you already did, so it started the right way. Although you have made a lot of explicit data, there are still many more that would be needed to make a more refined assessment, such as how much you owe for each type of credit, what interest rates are concerned, which terms, and so on.

However, I believe I can give you some tips based on your information. Your main financial goal for a long time should be to pay off these debts. So focus all your efforts on paying them back as quickly as possible, avoiding travel, superfluous purchases and even investments, as interest on loans and credit cards is certainly higher than the return on any investment you might make.

 

Make a very lean but realistic budget

debt loan

Then you should work out your budget (which you have apparently started) by listing all your really essential income and expenses to find out how much can be used to pay off debts that are not being directly deducted from the paycheck.

 

Prioritize “most expensive” debts

debt loan

See also which debts have the highest interest rates and prioritize them from highest to lowest. Look for the lender with the biggest debt, try to negotiate and pay it back as quickly as you can. When you delete it, move to the next highest priority and so on.

 

Track monthly debt reduction

debt reduction

Finally, make a balance sheet to know how monthly your debt repayments are going. Update them all. If after that you are unable to repay your debts on a monthly basis, I would suggest looking for a consumer protection agency and seeking help.

It is important for all your creditors to be aware of your real situation, as it is so much in your interest to repay the debt that it is in their interest to receive that payment. They are likely to negotiate with you something that makes the payment viable.

Also, it is crucial to invest in your financial education, seeking information to organize your financial life and even start investing. For that, I recommend reading the How to Invest Money eBook, bestselling digital investment product.

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