Managing debt can be really difficult, particularly during a pandemic. Credit card debt is easy to create and hard to pay off. Add on school loans, medical bills, mortgages, and car payments and the stress increases for just making minimum payments. Paying off debt sometimes takes money from your savings and slows down the process of reaching your financial goals.
According to the Statista Research Department, personal debt is obtained mainly through consumption rather than investment. This includes the buying of goods that do not appreciate in value and are consumable. That debt has skyrocketed since 2008 and is forecasted to continue through 2029. Here are four steps that you can take to turn your finances around.
Compile a List of Your Debt
Before you can accurately manage your debt, you have to determine exactly how much of it you have. The surefire way to do that is to compile a list and take a serious look at how much you owe. When you place your debt on a sheet of paper and really delve into it, you can see the specifics of your obligations. This takes out the guesswork. A debt list can also show how much you need to pay each month, and help you determine which accounts you can pay off the fastest.
Determine Your Total Expenses
After you make a list of your debt, you can better understand your total monthly expenses. As you look at the compiled list, don’t forget the interest rate you are paying on any applicable accounts. That amount matters as well. The current interest rate should be stated specifically on your bill. Compare it to the rates of your other similar accounts. Do some research on what a typical interest rate should be.
Lower Your Interest Rates
A third step to turn your finances around is to have your interest rates lowered. The best way to do this for your credit cards is to contact the credit card companies and ask them to do it. It is not a guarantee for a lower rate, however, there is no harm in requesting it. Due to the current economic climate, credit card companies are more willing to work with you to receive payments.
For your mortgage and car payments, you can make two payments monthly. This concept does not mean that you pay twice the amount, but rather divide the monthly total into two payments prior to the due date. By paying one half early and the other half on time, you cut down some of the interest.
Seek Professional Assistance
To get your debt under control, you may need to rely on a qualified resource for help. As you are aware, credit card companies will quickly tack on a late fee. This can occur as soon as the end of their business day. For other bills, a missed or late payment can lead to disconnection of utilities, repossession of vehicles, liens, and damaging credit scores. Attempting to manage your debt may prove to be too much of a burden for you to accomplish on your own. Fortunately, there are financial professionals that can get you on the right track. Learn more here about how you can turn your finances around before your debt spirals out of control.