Published: March 2, 2021
Are you deep into debt? Although it seems unfeasible for most debtors to get out of such financial problems, being debt-free is entirely possible by using the right strategy. A financial evaluation is essential in order for debtors to set spending priorities and decide on the best debt reduction strategy.
In case dealing with such problems is overly stressful for you, there are credit counselors ready to lend you a hand and provide you with detailed advice. When dealing with credit card (kredittkort) debt, make sure you prioritize your spending and set a strategy.
The following tips will prove helpful in your journey.
In order to eliminate your debt successfully, start by assessing your financial situation. Regardless of how much you try to avoid the harsh reality, coming to terms with your financial problems is considered essential. Make sure you create a list that includes all of your debts, as well as your monthly bills. It’s paramount to include the APR (annual percentage rate) when doing the calculations, as it increases the overall amount of money you owe.
Once you complete the list, have a detailed look at the balance of each credit card. Some individuals decide to pay off the debt on the cards with the highest interest in order not to waste plenty of money on interest. In contrast, others choose to start at the bottom and work their way to the top by consolidating the debt on their low-interest cards first.
After you select a convenient strategy, it’s time to make a comparison of your debts and income. Credit card balance isn’t the only factor to consider when comparing costs. You are also supposed to consider your mortgage payment, rent, and the money you spend on groceries.
One of the most effective ways to get rid of credit card debt is by setting the right priorities when it comes to spending. You are advised to start with secured debts, which involve collateral. Unless you pay off the amount you owe on time, you will be deprived of the asset you chose as collateral. Hence, you might end up without your house or car.
After making sure your secured debt is paid off, you should move to the one on your credit card. Nowadays, there are numerous online calculators helping borrowers determine the approximate payoff timeframe by entering basic information such as your balance and interest rate. You can also enter a particular timeframe in order to determine the monthly payment you’ll be required to return.
Many people make the mistake of neglecting their student loan debt. Nevertheless, federal authorities would never forget your obligation regarding the loan, which is why you need to make at least minimal payments. Otherwise, your wages and social security benefits will be collected by the federal government. Click here for a better understanding of the process of garnishment.
A promising solution would be applying for a 0% balance credit card. Most individuals are skeptical about this strategy, as it involves setting up a new account in order to close the previous one. Nevertheless, 0% balance credit cards are a beneficial long-term solution, particularly those providing long introductory periods, during which borrowers pay no interest. By transferring your debt to such an account you won’t be paying any interest in a period of at least fifteen to eighteen months.