Tuesday, March 23, 2021

Tips for Settling Your Debts On Time

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Being in debt can put a financial restraint on you and cause you to feel worried all the time. Unfortunately, debt has become one of the major issues households face, as the U.S Household Debt has reached a record high of $14.6 trillion. Fortunately, you can come out of it by taking the necessary steps to pay your arrears on time, as delaying will only compound more interests and increase your payments. Here are some pragmatic ways to help you settle your debts early.

1. Make a debt list

Knowing who and how much you owe is the first step in tackling your debts, and creating a list gives you a clearer picture. This helps you to budget any money that you acquire accordingly. You can start by listing the names of your creditor(s), the amount you owe them, plus their interest rates and the due date of payment. It’ll also help if you constantly update your list, especially after making your payments, as this keeps you up to date with your debt settlement. If you find the process daunting, you can use debt reduction apps for more effective debt management. 

2. Settle the bigger debts first

Large debts attract bigger interest rates, and postponing their payments will accrue more interest, increasing the amount you have to pay. This is why you should tackle them first. However, this doesn’t mean you should forget about the smaller debts. You can make it work by continuing to make your minimum monthly payments on loans and credit cards while diverting extra cash to your bigger loans. In case settling the bigger debts might not work for you, you can use a debt repayment calculator to determine how much is ideal for you to pay every month. 

3. Go above the minimum payment

While sticking to the minimum monthly payment is safe, it does little to accelerate your full debt settlement. Usually, it’s used to pay off the interests instead of your balance, and it keeps you paying for a long time. It’ll be best to deposit more than the required minimum amount to quickly come out of your arrears. For instance, if your minimum payment is $200, you can make it $300 or $400. This way, you’ll be settling your balance and interests simultaneously, thereby accelerating your payments.

4. Avoid additional debts

In settling your arrears, you must try everything possible to avoid incurring additional debt. It’s prudent to plan an effective budget and allocate the money you have to your pressing expenses. It’ll also help if you stop using your credit cards for a while; while they provide a sense of financial security, you’re in reality buying with money you don't have, which is still debt. Additionally, suspend luxury and stick to the essentials. 

Perhaps you’re deep in debt, and don’t know how to navigate through your settlement options. You can enlist the services of seasoned lawyers from firms such as Boulder Legal Group to advise you on the vital steps to take to settle your arrears on time.