Getting rid of debt requires commitment and discipline. It is necessary to make an accurate diagnosis of the financial situation of the family and that everyone is dedicated to cutting expenses. Here are ten tips for you to know what to do to get rid of debt.
As time goes on, we make more and more plans, which in turn can be executed in the short or long term. But in the midst of these plans, we may have contingencies and emergencies that can get us off track to these goals, and this can become a huge snowball.
According to Serasa Experian, the number of delinquents in Brazil has hit the 63 million mark, which corresponds to over 40% of the population. This increase in delinquency is the result of a major economic recession the country has suffered in recent years, as well as high inflation and general instability. The data were provided by Serasa Experian himself and were updated in March 2019, as you can read here.
Therefore, be aware that it is normal to face difficult times that may prevent you from paying your bills on time. What you cannot let happen is that it will become a debt that will drag on for years and years, causing interest to exceed the initial value of the debt.
To help you with this, Bronzecredit has prepared a series of tips that will help you get your financial life on track. Check out!
Personal finance experts say the first step is to map your debts, a diagnosis of each one. How long have you been in debt? Who do you owe? What is the amount of debt? What about interest? Getting these answers is critical to setting priorities later.
In addition to understanding the current status of your debts, make a survey of all your monthly expenses, as fixed, as bills and other obligations, as the possible expenses with dinners, tours, among others. It is important to know in detail where your money is going and how your debts evolve over the months.
Bronzecredit has also prepared a family budget spreadsheet that can help you identify these points more easily. It is worth checking!
Debt is often a source of shame, causing the person to hide the situation indoors. It is a serious mistake. If you are having trouble solving them on your own, involve your family so that everyone can be together on this mission. But remember that the responsibility will always be yours.
Here it is also essential that there is a frank conversation with everyone involved, making everyone aware of the need for financial re-education and the participation of all in containing any expenses and changes in daily habits. Starting with the details, we can save a lot!
Debt repayment should be a priority, so you need to take advantage of extra income, such as a vacation payment or income tax refund, and give up investments. However large the yield on a financial application, it will always pay off, pay off debt and save on interest.
At these times it is important to know that there is the right time to invest and the right time to contain. Remember: It is much more important to be debt-free than to have a higher monthly income. Debts can create future obstacles for you.
Just as savings will often have to be relinquished in order to pay off debt, debts that are longer or longer-lasting may call for the sacrifice of some good. Look in your assets for goods that can be sold.
This is where we get a more holistic view of the financial situation and realize that we don’t need everything we have. Remember: sometimes you have to take a step back to make significant progress.
It is crucial to reduce family monthly expenses. You can save even on essential expenses such as water, electricity and telephone, for example. It is better to promote a “downgrade” of quality of life in a planned way now than in a forced way later.
It’s important to mention that this may be the hardest step on this whole list. Decreasing the quality of life through habits and even switching homes, cars or consuming another product line requires a lot of effort and discipline.
Do the math and find out how much you can give up each month to repay your debt installments. It is normal for consumers to want to pay as much as possible, but this can become unviable. It is advisable to reserve 30% for the payment of benefits.
If you can’t separate this whole percentage every month, at least make sure you’re saving something and not letting debt accumulate. Remember that paying only the minimum credit card bill is a very dangerous trap, as interest rates are so high and debt keeps growing.
More expensive debts must be paid first. The most expensive are those that have very high interest rates, such as credit card , overdraft or home mortgage. If you really need your vehicle to work, it can also become a priority, but if you have the option of using some other means of transport, consider using it.
If you were planning to buy a new television, change your home furnishings, or make that trip, think about whether this is a good time. Unfortunately getting your financial health up to date requires some sacrifices, but you don’t have to be discouraged, as soon as you pay off your debts and relieve your breath, you’ll be even more delighted to make these new plans.
If the only way to repay the debt is to apply for a loan, opt for a lower interest credit line, such as Secured Credit (from 0.99% per month). But don’t be alarmed: the secured home loan option is one of the safest and most suitable for emergency situations, and is much better suited than using credit cards or overdraft (which is known to have one of the highest interest rates). between financial transactions).
This line of credit allows you to have installments that fit your needs and have much lower interest rates than other lines of credit available in the market. If you would like to know more about credit lines, we explain here.
Even though it may seem pointless at first to take out a loan to pay off debt, many Bronzecredit clients have already opted for it and are recovering their sleepless nights. This is because, with a much lower interest credit, it is possible to pay the expensive debts at once and keep only installments that fit in your pocket. This way you don’t compromise your monthly budget again and it is much easier to keep track of the installments of just one debt.
Only look for the lender when you know exactly the type of deal you can close with him. So when renegotiating a debt, keep in mind the amount you can pay in installments per month. The lender is also interested in negotiating because, for him, it is better to receive something than nothing. Use your bargaining power to reach a value that satisfies both parties, but remember: you still have a debt and you must pay it back.
This is also where the advantage of securing a home loan to repay debt also comes in. Once you have the cash in advance to make the payment with the lender, it is much easier to negotiate discounts and get rid of this debt once and for all!
If you are in debt, your name may be sent to credit protection records. Ideally, negotiate before that happens, because having the name on such a list prevents you from taking new loans, for example, among many other penalties, such as blocking the possibility of even purchasing certain services or buying a property or vehicle.
We know this is a very delicate moment in anyone’s life. Being in debt can take your sleep, your peace of mind, and sometimes even keep you from seeing a light at the end of the tunnel, but believe me, it exists! With determination, effort and, especially, total focus on debt settlement, you will regain your financial health.