Struggling to pay off debt? Worried you’ll sink into bankruptcy?
Debts have been a crippling problem on everyone’s finances, especially credit card debts that have increased. The average credit balance hangs at up to R69,750. With a problem like this, how do you face it head on?
The following tips can help you learn how to pay off debt and avoid bankruptcy.
1. Use Credit Only When Necessary
An effective tip in paying off debt is to use your credit card when needed, at times during emergencies. If possible, use cash for your purchases. This way, you can reduce the number of times where you use your credit card for various transactions.
A good reason behind it is that paying with credit card tends to have hidden charges when used. Paying in cash lets you spend less by allowing you pay the exact amount without the charges that hassle you when paying with credit.
2. Pay Your Credit Bills on Time
One of the ways to pay off debt is to pay the bills in time. Paying bills late will incur you penalties and interests, making you lose more money than save up. Another bad thing that you would get is that by not paying on time, it will reflect negatively on your credit score.
Having bad credit has detriments that will hurt your finances in the future. Credit and loans won’t get approved and you’ll deal with high-interest rates that make you pay more on your current loans and bills.
3. Pay Your Credit Bills in Full, Not Only the Minimum Balance
By paying off your credit bills above the minimum balance, you can ensure there is progress in paying off your debt. In the event that you don’t have enough to pay the amount in full, remember to pay above the 2-3% required.
Paying the minimum prolongs the agony of you repaying the charges, which banks want you to do as you end up paying more without going nowhere. Whenever possible, go above by doubling the minimum amount for payment. This would mean some cost cutting but that sacrifice won’t be in vain, allowing you to put a dent on the debt.
If worse comes to worst, try looking for other options to help you pay.
4. How to Pay Off Debt? Follow Your Budget
Following a budget down to the last cent is one of the best ways to pay off debt.
Use budgeting techniques to allot portions for living expenses like food, gas, and utilities. Set aside something for paying off debt above the minimum or in full.
If it appears that there’s not enough for you to pay more than the minimum amount, you might need to configure your budget. Try to cut down on certain things, like disable one of your subscriptions to a streaming service if you don’t use it at all, or only buy the things you don’t need.
If there’s still some remaining, then reward yourself for a bit.
5. Check Your Credit Report
Always check your credit report and look at your standing.
This should help you in finding out your status while facing off against a debt, help you monitor your credit, or even dispute a charge if you don’t recognize it. You can get a free credit report from Experian or with any of the other credit reporting companies (like TransUnion and Equifax).
Overcome Your Debt Today!
Debts become an issue to overcome when left alone and no action taken to surmount them. The simplest answer on how to pay off debt is a consistent and punctual payment in full measure.
Looking for more? Feel free to visit us and check out our services or apply for a loan today!