Whether we like it or not, at one point of our lives, we acquire debts. The reasons vary from person to person: some use it to fund academic pursuits, others emergencies like a family member getting ill, some to move to a new home, and it can go on and on. Debt seems to be a good way to get cash when emergency strikes, but paying it is another story. Most often than not, debts come with interests that make paying it a little bit more difficult—you pay higher than what you claimed and used, but that is how providers earn. So if you find it difficult paying your debts, the following strategies may be able to help you ease your situation up.
Even if you reason that acquiring new debts will help you pay your current debts, you will not be able to pay any debt in the long run; you will just fall into a cycle of debts that never get paid. If you have credit cards, minimize the use of it. It is wise to keep credit cards for emergency purposes and not as a way to pay needs daily.
Set aside an amount higher than the minimal payment every due date.
Every debt requires a minimum amount to be paid every month, or maybe twice a month—that depends on the payment terms and conditions you signed up with the provider. However, make a balanced decision if you want to do this: a wise financial planning is needed. Surely, you don’t want to risk your budget for other expenses; it is wise to only pay higher than the minimal amount if you have extra cash and is not in the brink of being broke after the debt payment due period.
This way, you can focus on the remaining balance and keep track without getting distracted. Give priorities when paying debts. There are two things to consider which debt should be paid first—the amount and the due date. Paying the debt nearest to its due to avoid acquiring higher interest if you fail to pay it on time is a great idea. After all, we all want to a higher interest rate in order to save money. Another alternative is to pay the debt with the smallest remaining balance; smaller debts are easier to pay. This will ensure that all the other debts will be paid with the extra from paying the smallest debt first. Just make sure that you do not take the due dates for granted; both factors—amount and due date—should be equally considered.
The wiser idea would be finding new ways to earn money so you can pay your debts without compromising your main source of income. How? The answer might just be sitting in your home. How about selling some of the things you no longer need? Have you considered starting a home-based business or job with a flexible schedule? How about accepting commissioned work for something you are good at during your free time? Another way is to review your current monthly expenses and trim down your wants to give way to your needs.
About the author:
Manilyn Moreno is a caterer and writer. She is a contributing author on Better Cater, a catering software company where she provides tips to caterers on managing event financials and recipe costing.
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