We cannot always handle our finances in as disciplined a way as we would like. Other times we are surprised by financial contingencies.
No matter what the reason, getting a loan is not always a bad idea. On the contrary, it can be a great ally to solve problems temporarily.
But be careful that the acquired loan does not become a new problem.
Today we will bring you some tips for getting organized to pay your debt avoiding the snowball effect.
Financial planning is the watchword
So that you don’t get into debt and lose control of your finances, organization and financial education should be watchwords for you from now on.
The first attitude you must take is to foresee the purchase of a loan. A golden tip is that you do not commit more than 20% of your monthly income to the debt you are about to acquire. This is already about 25% of what you need to be able to handle.
First steps of planning and organization
The first step in planning and organizing is to list all your income. Any and all sources of fixed income you have. That done, now is the time to list all your fixed debts (water, electricity, phone, internet, food, transportation) and your already invoiced debts (purchases already posted on your next credit or credit card bills) as well as other expenses adverse.
Now you need to evaluate what is essential to your spending and the unnecessary and superfluous spending that can be cut.
It may not seem like it, but sometimes we have expenses that we don’t even realize could be cut, significantly easing our budget.
The use of financial reserves will help you to be better organized for the repayment of your loan. Two things are important about your reservations.
We are not in the habit of saving, of course, but once you cut back on superfluous spending, you need to start saving your leftover income for later debt repayment.
By avoiding this you fall into the trap of spending the resource on other superfluous, unscheduled things. Remember: this money is not left over, it is being saved for repayment of the loan and ensuring its financial stability.
If you have managed to save a considerable amount it is time to seek a settlement with the bank for debt settlement.
When seeking an agreement stick to the interest charged as well as the CET, Total Effective Cost which are the expenses, charges and taxes charged on financial transactions.
Switching the financial institution can be a way out
Switching to a financial institution may be an alternative as you may receive lower interest offers if you relocate to a new financial institution.
However, be careful not to get trapped and the costs end up being even higher. Since interest rates may appear to be lower, but taxes from one financial institution to another may vary.