Debt has been one of life’s many difficult challenges that we just have to face. Even though a lot of us are in denial, we cannot shy away facts and statistics, that a large percentage of us are actually debtors. Debt is a financial hurdle that many people find so hard to maneuver even after years of trying. Have you ever been in a position where you wondered whether or not you will ever be free of the burden of debts? How will you refund your loans? Will you be in debts forever? You need not worry too much because here in this article, you will find some pragmatic step-by-step guides on how to ease the burden of debt before it takes over your mind.
Avoid debt accumulation
Why would anyone want to add more debts, when they haven’t cleared off the ones they owe? The reality is that it thus happens; but it isn’t a good practice and anyone interested in reducing the weight of debts on them has to cut out the act. The only way you can crown your efforts with success, in terms of paying your existing debts, is to not incur more debts. If you want to be free of the hassles of debts, then you’ve got to stop creating more debts for yourself. Create a budget for all your impending expenditures and stick with it. This will greatly lighten the weight of debts on your shoulder. It will also allow you time to gradually repay all your existing debts without any additional worries that may result from debt accumulation.
Refinance your mortgage
If your debts have come in the form of a mortgage, you may want to consider refinancing it. This will save you a whole load of stress and protect you from the pitfall of bankruptcy. Refinancing will allow you to reduce your monthly installment, if you’ve obtained a housing loan, and also get you much improved interest rates and possibly a longer amortization period. The safest way to lighten a mortgage burden is to either reduce your monthly payments, or your interest rates. The concept of refinancing might be strange to some people, so we will do a little breakdown of what it entails in this article. Tag along
Debt Refinancing:
It is simply a process of replacing your mortgage with a new one, which has better terms. Debt refinancing will provide you with enough loan, to clear off your remaining installments while giving you a lesser interest rates and longer term in paying the new mortgage. You may consider getting a cash-out refinance loan, which allows you to obtain a loan on your equity over the property, OR you may consider a cash-in refinance loan if the home’s value is lower than the mortgage.
Can you now see that there is a “silver linen”, after all? In fact, some lenders may even offer you refinancing over your car loans, student loans and many more.
Renegotiate your debt terms
Sometimes all you need to do to lessen the burden of debts on you is to go back to the drawing board. If you are burdened by debts composed of credit cards debts, you can give yourself a breather by reaching out to the credit card company. Credit card companies might be willing to offer you a more improved solution to your immediate challenges here, especially if you are an old customer with good credit history. They can afford to allow you lower your rate (which would reduce your financial burden, at least temporarily) if you are a customer they trust and whose credit history reveals prompt payments in the past. When you contact them about wanting to renegotiate the terms of your existing deal, you will have to provide them with your current interest rate and also your account history with them.
Debt Consolidation
This is, by far, one of the most adopted strategies in debt control. However, not everyone uses it to the utmost of its capabilities. Consolidating debts is a smart way to reduce the burden of debts on anyone’s shoulder. Imagine if you have to make about 10 monthly installments at different rates and for different purposes. Not so cool! Such situation will be overwhelming for anyone confronted by it. However, you no longer have to live with this huge burden of debts. Debt consolidation plan allows you to merge all of your debts into one single lump for which you can now make one monthly payment for. This plan will drastically reduce the monthly payments required of you by up to 40-50%, by lowering your overall interest rates. You can now start to think about making a single payment come month end rather than making multiple payments, which could be more strenuous and you might even forget to pay some debts because of how overwhelming the entire situation is. The downside to debt consolidation is the longer term involved, because you will now have to make your overall payments over a long period of time. But it is worth the wait, if it will help you ease your debt burden.
Snowball your debt
It is often rare to see people with just a singular debt feeling burdened and worried. Most times when people are starting to the feel the heat of debts, it is because they have more than one debt source. These different debts, most likely, have different interest rates, different terms and duration. Snowballing your debt requires that you make a list of all your debts without paying attention to their interest rates but only listing them in the order of their sizes. You now gradually pay off the smallest ones to begin with, while making minimum payments on the other ones. This will help you cross out your smaller debts and will give you some great psychological boosts knowing fully well that a creditor is off the list.