Financial institutions are more than eager to offer you numerous credit facilities in the form of loans and credit cards in their race to be ahead of their competitors in the credit market. If you’re not aware of your credit standing and you start falling back on payments, you might just end up drowning in debt. In order to steer clear of bad debt, you will have to take some important financial measures.
Find Out How Much You Owe
Individuals and companies are often unaware of the actual figures. If your financial health is suffering, it’s important to collect financial data to determine your outgoings, balances, interest rates, loan tenures and credit card fees. Whether you factor in long term loans or not depends on your personal circumstance. You should, however, aim to clear your current debt with the highest balance and interest rate.
After getting a clear picture of your debt, you will have to create a budget to manage your spending. If you don’t draw up a budget, you won’t know how much you can afford to spend and you won’t be able to set aside a certain amount to repay your debt. To plan a budget, write down your income minus tax and then subtract your monthly outgoings from this figure. Mortgage repayments, grocery bills, utility bills, insurance payments and any other loan payments should be deducted from the income. What’s left is the amount you can use to repay your debt. If this figure is too small, you might have to curb spending or think of other ways of wealth creation. You could consider working extra hours to generate more income, switching a job or even refinancing loans to lock in a lower interest rate.
Consolidate Your Debt
If you’re finding it hard to keep track of the amounts you owe different financial institutions, you could consolidate your debts on car loans, mortgage payments and credit cards on one single loan. Peer-to-peer lending may be helpful in this regard. However, you need to look into loan termination fees, settlement fees and mortgage registration fees before looking at refinancing as an option. Also, remember to chase refinancing loans that offer you flexible repayments and redraw facilities.
Shop around and Negotiate
Once you’ve started to fall back on your payments, you’ll have to negotiate new arrangements with your credit providers. Try to negotiate a lower rate of interest or change the terms on your debt. You could also switch your credit card balance to another company that’s offering you 0% interest rate as a promotional offer for one year. Also, avoid increasing your credit limit until you clear all your debts.
Look for No Repayment Store Cards
No repayment store cards, allow you to purchase products or goods, without having to make repayments for a number of months or a year. This will give you a breather until you finish paying what you already owe your credit providers. You have to remember to repay the full amount within the time specified in the contract, or you’ll risk having to repay the full amount with a very high-interest rate of nearly 20%.
Contact Revive Financial
If you’re struggling to pay even low amounts, get in touch with the skilled consultants at Revive. We will draw up a debt management plan for you to get you out of financial problems at the earliest. Whether you’re an individual, sole proprietor or business owner, we will offer you the best debt advice that will save you thousands in interest.
For more information on personal insolvency, check out our personal insolvency page here.