Too many loans to clear, too short time? Being paying off debtors and juggling multiple loans like a credit card, overdraft, personal and student loans, mortgages and car payments can be stressful – but all it takes is the right technique to assist you to manage your debt.
Set clear goals for paying off your debts
The initial step to managing your debt is to find your present debt situation. To get an outline of your debts, you can get a credit report that plots your current outstanding balance, several loans and credit limit.
You would then be able to decide on how long you need to give yourself to pay it off, regardless of whether it’s 5 years, 10 years or even more.
Consider debt consolidation
Debt consolidation is a technique of rolling all of your credits into one single, lower interest payment. There are two primary approaches to consolidate your debt: a debt consolidation loan and a credit card balance transfer.
A low-interest debt consolidation loan can be useful to merge multiple high-interest loans, for example, credit cards and personal loans. This can help to lower your accumulated monthly scheduled payments and interest rates. Debt-consolidation loans can assist you to streamline your budget by letting you pay off debts in one simple monthly instalment.
If you have a housing loan, consider refinancing your home, which can lower the interest rates. Set Payment reminders to stay on track
Avoid being stuck with extra charges, for example, late instalment fees (you can be charged 1% of your outstanding card balance!) by setting up a payment reminder on your mobile phone or personal computer.
Which debt should I pay off first?
Planning to use your additional money to pay some of your loans? Here are two efficient strategies which you can implement to clear your debts.
You can pay off the credit with the minimum balance while maintaining the minimum payment amount on different loans.
Start focussing on the credit with the highest interest rate and keep paying the minimum amount on other loans.
But which one suits you best? The thing is to choose the exact solution which works for your lifestyle and keeps you motivated to proceed with your debt management journey.
The most important thing to remember is that clearing your loans can take some time, so it is important to remain on your target track and consistently practice good money management habit to help maintain your budget plan in order.
While debt consolidation can be a smart move, it’s only beneficial long-term if you choose a loan with ideal terms, avoid loans that present undue risks, and change your characteristics so you don’t keep on piling on unpaid liability.