It’s almost impossible to live credit free. At any time you could find yourself managing monthly payments to a couple of credit cards, a car loan, and a mortgage but we live in uncertain times. Interests fluctuate and a job is no longer for life and we gather commitments financial and otherwise. It doesn’t take a lot to throw a spanner in the works to leave you unable to manage your debts. There are at least two things you can do.
Think Seriously of Paying Down Debt
It may look like a no-brainer but so many people don't take things seriously until they get out of hand. Managing your budget is one thing, but setting your mind on using those savings to actually pay down your debt is another. It can be tough to decide which debt to pay first when you have many on your list. A good thing to do is to focus on one debt at a time. If you focus on paying one debt at a time, you will be able to build momentum and eventually get it out of the way.
Move to your second debt after you have done with the first. Do not restrict yourself to the minimum monthly payment but use your savings from the first debt towards paying the second. Continue using the same pattern and keep ticking off debts one by one from your list as the amount you pay from your savings increases.
Consolidate Credit Card Debt
When you don't have the luxury to make small payments for several individual debts, you should consider other options like loans specifically for debt consolidation. The idea is to consolidate all your debts into one by taking a loan that pays them off directly so you can focus on making a single payment on a regular basis to one new lender.
Debt consolidation has many benefits other than reducing debts to a single monthly payment. For instance, it increases your chances of securing a lower interest rate. It means you could end up saving a significant amount of money on a consolidation loan with a low APR compared to the total costs of multiple APRs you currently pay.
Moreover, debt consolidation helps improve your credit score. It works especially when you have already maxed out your credit cards. In this case, because your use is on the higher side there is a direct impact on your credit score. A consolidation loan lets you pay off multiple credit cards to reduce your usage ratio and improve your credit score.
When you are really in debt, you think about nothing else and it’s all too simple to pretend it’s happening. But it will catch up in the end, only bigger and harder to get rid of. If you take action as soon as you feel overwhelmed it will work out cheaper and there are plenty of organizations around that help you negotiate with your creditors to get everyone paid and you back in control.