The last months have been a source of constant stress for individuals. It is because of the economic fluctuations, major unemployment, and high rising costs.
Many individuals seek ways to counter their debts.
They do so with budgeting, planning debt, debt management firms and borrowing. Yes, most individuals resort to loans like credit builder loans, debt consolidation and other loans to regulate their finances and cover up job loss expenses.
Thus, if you have a range of debts in your credit profile but struggle to manage these, the below strategies will help. It is all about ensuring comfortable finances in the year 2024.
Let’s begin!
6 Ways to reduce and regulate debts
Around 65% of individuals struggle to manage debts the right way. It is the reason most of the time individuals skip payments and important bills. It eventually impacts the credit rating and other lifestyle aspects drastically. Thus, here is the en route to understanding and controlling your debts:
1) Analyse how much you owe
While it may tempt you to bury your head in the sand, it may not be a suitable solution. Instead, you must sit down and analyse your debts. Begin by making a list of your debts that you owe. It may include debts like- car loans, payday debts, doorstep loans, bad credit loans, etc. Next, jot down the total amount you owe on these loans.
2) Work out what you can pay
Your available income is the one that you can use to clear your debt payments. You can get it after developing a budget for your expenses. It is important as lenders would like to know the amount you would like to pay and guess its feasibility.
This is because paying too low on debts may not work as well. You would need to negotiate it with the lender. However, before entering the pay cycle, analyse whether you have the required documents:
- Bank statements
- Payslips
- Debit and credit card statements
- Receipts of things that you for in cash
Moreover, you can use certain tools that help you know the standard financial statement. You can present this as well before the lender.
3) Pay the debt that’s costing you the most
One of the best ways to pay debt is by analysing the high-interest debts. Analyse how much you have to pay and the interest rates. For example, debts like- mortgages, student loans, credit cards, overdrafts, and short-term loans cost the most. Analyse which of these to pay first. Mortgage and student loans are known as good debts.
Prioritise paying debts that do not add positively to your credit score and report. These are- overdrafts, payday loans with penalties, doorstep loans, and credit cards. It will grant you the quickest range of motivation.
4) Consolidate if you cannot pay all
Well, if you find paying the high-interest debt troublesome, consolidate it. It is one of the quickest and smartest ways of dealing with multiple debts. Individuals suffering from too many debts and need to upscale their lifestyle, may benefit from debt consolidation loans in Ireland marketplace.
These loans allow you to revise the payment terms, interest rates and repayments according to your affordability. Merging high-interest-consuming debts into a single or one-off payment every month improves your credit score.
Moreover, it will help you manage your other liabilities well. Although a debt consolidation loan is also a liability, it would still be more affordable than the existing arrangement.
Identify whether the loan is right for you by analysing the criteria and your debts. Choose it only if you can manage the new loan within the existing income premises.
5) Analyse whether you can negotiate
Negotiation grants you authority over your finances and clears the bill. Identify whether you can negotiate the debts with your lenders. However, not every lender may be eager to negotiate. If you are on better, or friendly terms with him, he may try.
Before that, put forward the value or the amount slightly higher than what you can pay and negotiate it to the amount you can pay on debts. It will help you negotiate your debts to a greater deal.
Identify the ways to pay extra or more on the debts. You can do so by having an alternative income, tapping your savings, seeking a hike at the existing company, or utilising tax benefits. By paying more than what you can towards the debts, clear the debt hassle-free.
6) Change your financial behaviour
It is another most important part of your finances. Regulating and monitoring your financial behaviour will help you achieve your financial goals quickly. Whether it is about freedom from debt or saving for a car finance deposit, you can achieve it all.
Breaking from the old financial habits like- spending more on weekends, taking up subscriptions and renewing often, applying for so many credit cards and using only some, etc., may help you achieve it.
You need a money makeover. Analyse the debts that you must pay and the habits impacting them. It could be that you spend more on clothes/apparel or unnecessary things.
Managing debts is more about cultivating a healthy mindset. Analyse the best ways you can do so. You can do it by – learning from your past mistakes. For example- if you spend more on something due to addiction, it may not be healthy for your finances. Thus, counter such habits and replace them with a savings mindset. It will help you improve your financial well-being.
Moreover, habits like using overdrafts for short-term needs could hamper your financials. Instead, switch to a healthier way to finance it by searching for a private loan company “near me”for your needs. It will help you finance your needs more affordably than overdrafts. Moreover, a disciplined payment schedule will help you make quick and responsible payments.
Bottom line
These are some ways to control and manage your debts the next year. If you have been facing debt issues for long, these steps may help you overcome it. Analyse the best ways like debt consolidation, debt management and budgeting to control and manage debt. Additionally, try other ways like increasing income, and part-time income to finance it.
Caleb works as a senior content writer at Financealoan for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
