5 of the Best Practices to Easily Reduce Your Debts
There are people who have borrowed an amount of money for something really important, and end up not being able to pay the said amount. As a result, they have filed for bankruptcy as their credit scores have been messed up. You definitely don’t want to reach this point. The good news is that there are ways for you to reduce your debts and avoid them from piling up.
Understand the terms and conditions
Before even agreeing to borrow a certain amount of money, it is important that you understand what the terms and conditions are. You need to know when you are going to repay what you have borrowed and how much is the interest rate. Take note that in borrowing money, be it from a bank or a lending firm, you don’t just repay the principal amount. You also have to pay for the interest. You might also have to pay for penalties or fines if you are unable to repay on time. This is where people are drowned in debts. They never anticipate the possibility of paying the interest and penalty.
Pay interests first before regular payments
This is a trick to help you avoid paying for interests especially if they keep compounding. Even before you are scheduled to repay the principal amount, you start paying off the interest so that you won’t be burdened later on. Not so many people can afford doing this, but if you do, it is a huge help.
Use auto pay
This is one of the best strategies especially if you are not disciplined when it comes to paying off your debt. Instead of writing a check or paying in cash, you automatically connect the company where you have borrowed money to your payroll. By then, the amount will be paid even before you receive your salary. The amount that goes into your account is already free of debts. Even if it looks really small, you can feel complacent since you have nothing else to pay for.
Pay more than what you are asked monthly
There is a certain amount that you need to pay on a monthly basis. It is possible that you pay more than what is asked of you. The amount that you have paid in advance will be deducted from the overall cost. You have to do this especially if you have extra money. Later, when you don’t have enough money, it is fine since you have already paid a certain amount in advance. If you keep doing this, you will repay the entire loan before you even know it.
These are just some of the keys to finally pay off your debt. The biggest key though is discipline. You have to always remember the amount that you have borrowed and make certain sacrifices. It will just be for the next few months or years. Once you are done, it won’t be a big problem anymore and you can go back to your regular expenditures.
Photo Attribution:
Featured and 1st image by Stuart Miles/Freedigitalphotos.net
2nd image by Stuart Miles/Freedigitalphotos.net
