Applying for loans during difficult times is tempting. However, paying back these loans can prove to be a daunting task. It should be of no surprise that settling your debts on time is paramount to ensure you avoid penalties.
However, if you find yourself in the pits, drowning in debt, here is a simple guide to help you improve your plight and reduce the probability of being prone to penalties:
Choosing the Ideal Credit Card
Choosing the right credit is vital. There are numerous companies with a variety of appealing features that may fulfill your needs. Be sure to find the company that offers you the least interest rate on balance transfers. These discounts and offers are usually valid for a limited period so make sure you get a credit card at the right time.
Strategize
After getting the credit card you want, be sure to plan according to your needs. Keep the following things in mind – your payday, payment dates for your utility bills, monthly expenditure on groceries and essentials, and so forth, and ensure you come up with a way to make these payments efficiently.
Revise your Reports Every now and then
Always look carefully at your credit reports for suspicious and fraudulent activities. Keep a track of your pending payments and their respective due dates. Set reminders to help you clear your credit card debts back in time.
Monitoring your credit reports frequently will help you strategize effectively and will leave you well-organized with your financial statements.
Prioritize your Debts
It is vitally important for you to prioritize your debts and clear them accordingly. Make a list of all your pending debts in accordance with their priority. For example, Utility bills, court penalties and defaults, mortgages should be cleared first. Your personal loans, home credits, overdrafts can be paid later.
A Good Credit Score makes it easier
Consistently improving credit score can do you wonders. A consistently good credit score improves your reliability as a borrower. Be sure to follow the steps required to earn and maintain the credit scores you want.
Stop being a Procrastinator
Irrespective of the number of plans you draw up or the transfer cards you get, delaying payments is bound to do you a lot of harm. Unfortunately, there is no way out of these debts other than being smart about them and clearing them as per schedule.
Do not get into the habit of making minimum repayments as this will end up prolonging your paybacks and reduce your credit scores.
Rollback on your Expenditures
While you may be under the false impression that even luxuries qualify as necessities in this day and age, you are better off keeping big expenses at bay unless they are necessary. In a nutshell, save as much as you possibly can and use that money to gradually pay off your debts.
Tap into your Savings
If you are unable to pay off your debts with your current income, you may have to tap into your savings. While you may have your savings tucked away for something special, we reckon this could possibly be the best use for it if you are struggling with clearing your debts.
Also, saving on a microscale in your daily endeavors can take you a long way. In a nutshell, stay within your budget and maintain a healthy amount of savings.
Your marriage may have more benefits than you think
If you are married, you may have a slightly easier time with your debts. “Marriage Allowance” is a scheme that lets the lesser earner (non-tax payer) of a couple transfer money from their personal allowance to the higher earner (taxpayer). This way, the higher earner gets up to EUR 250 off of the taxes.
Talk to your Lenders
One of the best ways to solve the puzzle of unsettled debts is to talk to the concerned lender. In times like these, the lenders are likely to go the extra mile and help you find different ways to pay off your debts. Avoid borrowing money to clear earlier debts.
Sell Antique pieces and Unnecessary goods
An innovative way to ease the burden of debt clearing is to sell antique pieces and things that you may not need. Costly paintings, antique decor items, and famous art-works are examples of the same.
Are you forgetting any bank account?
In a potentially chaotic situation like this, there is a possibility albeit unlikely, that you have other bank accounts that you have not tended to in a while. Check for accounts that you have already opened and investments like stocks and property.
Scratch Better deals for Insurances
When you are already limiting your expenditures to manage your budget, why not switch to discounted insurance deals? As the renewal date arrives, start digging for better deals that match your current budget.
Managing Council Taxes
You can also save up some cash by availing discounts on council taxes. If your income is considerably low, or if you are a bachelor or disabled, you probably have a fat chance at a variety of discounts and offers on council taxes.
Start taking IVA into account
You can sign a contract with your lender where you promise to clear your debts within the tenure agreed upon. This is usually referred to as IVA- Individual Voluntary Arrangement.
Do Not Slip
Clearing your debts will not do you much good if you take on poor financial habits. It is critical that you stay smart and cautious with your finances.