And so the most difficult of years for many of us draws close to an end. It has certainly been a year to forget, though that may be difficult. But an additional problem many will face as 2021 begins is extra debt. And they must make debt reduction a priority for the coming year. We took a look at ways to lower your debt in 2021.
Ways To Lower Your Debt In 2021 – First Step To Take – Do The Maths
Your starting point when dealing with debt should always be to fully lay out what it is you owe. Work out to the exact penny who you owe, the amounts and more. You must list interest rates, and payment dates. This is crucial because you need to sort a strategy for paying off debt.
Second Step – Pay Off The Most Expensive Debt.
In previous articles, i have covered the different ways to pay off debt. Different methods people use. One was to pay off the smallest debts first, as there is a positive psychological effect to having fewer sources of debt. My own opinion is that you should avoid such a strategy as it makes little sense. The sensible approach is to pay off your most expensive debts first. And what i mean by this is the debt that is attracting the greatest costs, which usually means highest interest rates. This makes the most sense, as it saves you more money – or more to the point, limits losses the most. And the more losses you avoid in interest, the more money you have to pay off debt. It makes sense in every form. you just need to be patient and accept having multiple sources of debt hanging over you.
My Example
Let’s look at a real example. In the past year i have quite successfully reduced my debt levels, but i have a long journey still to complete. So in November i wrote to evert credit card company requesting help. I did not expect a reply, but wanted a freeze on interest rates as it felt like i was going round in circles. Amazingly, two creditors have frozen my interest charges for the near future. They are two of my biggest debts. But now, it makes little sense to pay off more than the minimum amounts, whilst focusing on other debts that attract interest charges. When the freeze ends, i shall up repayments again.
Ways To Lower Your Debt In 2021 – Good Credit Score? That Will Help
The reason i wrote to credit card companies was that my options were limited. To be honest, they were non-existent. I had large debts, which meant my debt to income ratio was large. This lowered my credit score, which means i would not be accepted for a new credit card, could not get a loan, or consolidate debt. I was stuck in a vicious circle. But if you have a good rating, your options are much better. Look into consolidating debt for a start. Look at peer-to-peer loans, which offer very low interest rates. Do balance transfers and move that debt around, to avoid prohibitive interest charges. And perhaps contact your creditors too and ask for a helping hand. You have nothing to lose by asking.
Extra Income?
With our spare time not of much use during a pandemic, it may be possible for you to take on extra income for a short period of time, to get rid of those debts as quickly as possible. The key is that you should never over exert yourself. Do not put your health and wellbeing at risk to pay off debts. Only work hours you are comfortable doing so. But with an end goal in sight, it may help make such a decision and the longer hours more bearable.
Ways To Lower Your Debt In 2021 – It’s Good To Talk
If you see no way out of your financial situation, then you should never turn a blind eye to what is going on. I used to, and it was only the pandemic and lockdown that laid bare to me what a terrible position i was in. In the previous weeks, i had been selling off items to get by, it was that bad. It was a wake-up call. So seek financial help. There are a wealth of people out there who have the experience to assist people like you.
