If you’re a regular reader of this blog, then you may remember an article we posted on the 6th October that talked about the bad habits that keep you poor. Following on from this, we want to talk about one of the main issues you’ll have when you’re poor; debt.
Debt is an issue that affects hundreds of thousands of people every year, with many struggling to get out of it. As such, it’s beneficial if you learn how to repay your debts the right way and minimize the stress that comes with them. Here are a few things to consider:
Create A Repayment Plan
A good way to pay your debts is to create a repayment plan and be more organized. With one of these, you know exactly how much you have to pay, and when. It can help you create a budget that enables you to live your life while still setting aside some money to pay off a debt. This is a much better way of approaching things compared to if you just wing it and pay random amounts at random intervals. If you’re lucky, you may have a repayment plan sorted out for you, like when you get a mortgage and the company sets one up. If not, there are sites like thesimpledollar.com with tips to help you create one.
Prioritize Your Debts
If you’ve got multiple debts to pay, it’s clear some will be more important than others. Consequently, you need to prioritize your debts so the important ones are paid first. How can you do this? Look at how much money you owe, if any interest rates increase with time, and if there are further consequences when you fail to pay the debt. Let’s say you have two loans to pay, one is a secured loan with high-interest rates, and the other is unsecured with a fairly low-interest rate. There’s an article on unsecuredpersonal.loans that describe the difference between the two, the main one being that secured loans require you to put something up as collateral. Therefore, if you fail to pay the loan, this thing can be taken away from you. A good example of this is when you get a loan to buy a car. Fail to pay off that debt, and the company will take your car off you. As such, this debt takes priority over something less important.
Put Your Debts First
As well as prioritizing your debts in the sense that you pay the most important ones first, you also need to give them priority over everything else. Focus on getting rid of debt before you do something like paying for an expensive holiday. The longer you remain in debt, the harder it is to get out of. Think of it like cleaning out your garage, if you do it when there’s hardly any junk in there, it’s an easy task. But, leave it for weeks and months, and the garbage piles up until it’s an almost impossible job.
Hopefully, this simple advice can help you pay your debts the right way, and stabilize your financial situation.