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Simple Ways of Devising a Smart Debt Repayment Plan

  • Drowning in debts with no aid whatsoever could be the most horrific experience in one’s life. People tend to panic and get themselves in even worse conditions by taking another loan to pay their existing debts off. Managing debt is the key to a successful repayment plan but it is impossible to achieve that without help from skilled professionals and proper guidelines to follow. If you’re devising a strategy for debt repayment, then you need to read the following simple guidelines and work hard to follow them: (Information Credit: https://debt-therapy.co.za/5-step-debt-management-plan)

     

    • Listing Debts:

    The first step towards making a guaranteed debt repayment plan is to create a comprehensive list of all debts which are needed to be paid off. The list should also include the minimum payment amount, amount of debt owed, and the interest rate applied to the debt. The list must also contain info regarding credit cards, personal loans (if any) and mortgage repayments so that it becomes easy to ascertain your current financial state and take any further steps.

     

    • Ranking Debts:

    In this phase, you need to rank all debts in the order in which these are needed to be paid off. It means that the ranking will clarify the debtor’s priority of each debt. Professionals often advise ranking debts in increasing order which makes it easy to pay off thedebts of smaller amounts quickly. Another known ranking method is to rank debts in decreasing order of its interest rates. The second method saves you money in the end after repayment of all debts.

     

    • Finding Extra Money:

    Now it is time to figure out the amount of extra money one must spare each month tobegin paying off their debts. Cutting back expenditure and saving money is one way to go around the debt repayment plan. Part-time jobs, overtime hours and similar steps might help in meeting expectations quickly.

     

    • Accumulating Savings:

    Putting aside extra money as savings helps a lot in repayment of debts. Cancelling credit cards and cutting up expenditure is the final step in building up savings. This method is mostly used to take control of your finances so that a debtor can avoid getting into debt next time.

     

    These methods come in handy to those people who have many debts to be cleared off. An emergency fundalso assists debtors in making their repayment. Small emergency funds of one month’s salary can help in theprevention of using credit cards further during the process of repaying debts.

     

    A perfect debt repayment plan is not devised in a day and all by yourself. Matters of debts and loans can be very complex and it requires expertise to properly counter a strategic plan for clearing one’s debt. There are several debt counselling agencies from where debtors can get services that assist in on-time debt payment. They have experience in understanding and solving a debtor’s problems. Clearing off one’s debt isn’t rocket science when one has legalbenefit, appropriate consultation and smart debt repayment plan at hand.