The word debt is enough to make anyone of us stressful, especially when dealing with multiple debts. Today, every people have their own reason to apply for a debt, some apply for it to purchase a car, home or to sponsor their holiday trip. Well, these were planned debts and there are some debts that are not planned. Sometimes, we come across emergency situations which are beyond our financial capabilities and we have to take borrow in order to fix such crisis.
Well planned or not, getting a debt can be really helpful, but the problem arises when you end up getting more debt than you can handle and as a result, you will end up in a Bermuda situation where repaying the debt becomes a herculean task. Not only it affects a person emotionally but financially as well. As you keep delaying the payment, your credit score keeps on declining which can make it furthermore difficult for you to borrow in the future.
When you are dealing with multiple debts, your best strategy should be to take on all the debts one by one and in an effective order. Yes, you heard it right! You will have to prioritise the debts in order to clear them faster. Now, you must be wondering how you can do it. Well, we have mentioned that in this blog briefly. So, let us get started.
- Start with the list
You cannot pay all your debts entirely if you don’t have the exact idea of how you much owe exactly. For that, you will have to first create a list of all the debts that you still have to pay. While creating the list, don’t just put the names of only the big ones and write down about the smallest one as well because sometimes, the short amount debt can surprise you the most due to the higher interest rate. In your list, mention all the information about the debt that can help you understand about debt completely. Here are the details that you can add on your list as per the debts:
- The information about the lender
- The category of debt that you have opted
- Total amount owed
- The interest rate offered as per the debt
- Minimum amount to be paid
- Total time required to complete the repayment
- Possible benefits that you can get
- Seek the opportunity to reduce the interest rates
After you have prepared the list and have got the clear picture how much exactly what you owe, next thing that you need to do is scan the list and search for the debt that you can clearly. There would be debts that must be on the verge of completion and one adequate payment is enough to get rid of them. Well, in a tight situation like this, you might not be able to save much to make that big payment. If your credit score is really affected due to the large number of debt that you owe, then you can apply for very bad credit loans with no guarantor from a direct lender who offers such loans.
- Don’t exhaust yourself
Yes, your primary target is to finish off all your debts as early as possible, but this doesn’t mean that you should sacrifice even your basic needs just to reach this goal. Clearing the debt is important, but more important is living a healthy and stress-free life. Don’t make your debt clearing mission so aggressive that you are struggling in meeting up your basic necessities like food, clothing and other basic utilities. Unfortunately, even after targeting fewer debts at a time, you are still struggling, then your income could be an issue here. However, there is still an option to earn more and i.e. freelancing work. Yes, you can work from home in order to generate more income, which could help you in becoming financially stable. The amount that you will be generating might be low, but will be adequate enough to manage some of your debts instalments.
- Target the high-interest rate debt
You need to clear all your debt that is for sure, but you need to be smarter while making the repayment of the debt. You should formulate a strategy in which you should target the high-interest debts as delaying them can cost you the maximum. If in the list there are significant credit card debts, then it is important that you go for them first because the interest rate of the credit card gets accumulated very rapidly and their rate is also very high. Thus, it will be better if you target the debts according to their interest rate charged in it.
There is no denying the fact that having too many debts can make a person’s life really stressful, so it is important to clear them as soon as possible before the situation gets worse. Description: If you are under the burden of too many debts, then it will be better if prepare a strategy to target them one by one rather than going randomly.