How To Repay Debt And Avoid Late Payments

May 17, 2022 | Daniel Dewitt

debt repayment plan

 

When it comes to debt, it is something we have all dealt with – or are still dealing with right now. Of course, the amount you owe depends on many factors, especially age. Mortgages, credit cards, student loans, and late payments also play a big part in debt. And many times it can be difficult to find a way to handle debt repayment.

The good news is it doesn’t have to be impossible to find a good way to handle repaying your debt. In fact, with a little work and the right tips on your mind, you can begin working on repaying your debt and avoiding your late fees as soon as right now. So, if you are ready to get your debt under control, here are six tips to help you begin successful debt repayment.

Six Tips To Help You Handle Your Debt Repayment

1. Have A Good Understanding Of What You Owe

Many people can’t answer the question of how much debt they have, let alone name all the sources of it. To have a solid debt repayment plan, you should assess exactly what you owe, right down to the last penny. It may not be an easy task, especially if you have numerous credit cards and other miscellaneous accounts, but it’s vital to starting debt repayment.

Once you list everything you owe, outline the most important details of each, including the payment due date, interest rate, and the monthly minimum payment (typically around 1% of your total balance). You will then have an understanding of not just your debt, but which debt you should start with when it comes time to make your repayments.

2. Choose A Debt Repayment Strategy

Once you understand your debt, create a debt repayment plan. You can use either the debt avalanche approach or the snowball approach. A debt avalanche approach means you prioritize paying down the debt with the highest interest rate and then covering the minimum monthly payment on the rest. After you pay off the highest interest rate debt, you move on to the second-highest.

Debt snowball takes the opposite approach. With this method, you pay off the small debt and make minimum payments on the rest. This also includes taking the money from the paid-off debt and using it to pay the debt that’s the next smallest. The avalanche method may be the fast way to pay off debt, but those who go with the snowball approach are more likely to eliminate debt entirely.

3. Cut Spending

Significant debt repayment is usually out of the question if you don’t tweak your spending habits at the same time. If you are using your credit card far too much for things you don’t need, consider getting rid of a few or putting them on pause for a while, leaving you to only pay for essentials. It’s a critical way to get out of debt, but a challenging one if you’re used to paying with a credit card.

To help you out, you can use your budget as guidance for your new spending approach. Divide your spending into categories, such as health, finance, and food. Once you have your categories in place, you can cut first from the “other” category that should be made up of wants, like eating out and travel, rather than needs.

 

repaying debt

 

4. Pay More Than The Minimum

Another way to handle your debt repayment is to pay more than your minimums on your bills. Keep in mind this way of paying off your debt might not always be possible. But if you’re in a place to conquer your debt faster by either paying more than the minimum or more than just once a month, go for it. If you are unsure if the plan works, try it for a month and reevaluate.

5. Manage Payments More Effectively

A big key to debt repayment and financial security is making sure you make all your payments on time. If you’re having difficulty keeping track of your debt and payment schedule, try creating a spreadsheet or a personal calendar that outlines exactly what is due and when.

Another approach is picking a day out of the week where you can go over your bills and review upcoming debt repayment days you’ve set for yourself. Many find enrolling in automatic payments through a credit union or bank vital to juggling bills. You can pick an auto-draft day and the exact amount you want to pay each month.

6. Always Take Care Of A Financial Emergency Quickly

When facing an unexpected financial emergency, it’s tempting to put it aside, especially if you don’t have savings to cover the problem. One option that can help you out is a car title loan. A car title loan uses your vehicle’s title in exchange for a loan that is specifically designed to help you address a financial emergency quickly.

It can take as little as 30 minutes to qualify for a car title loan of up to $15,000 at Fast Auto Loans, Inc., and you can get the cash you need as early as the same day. Just head to our homepage and fill out the short title loan form. One of our loan representatives from the nearest Arizona title loan location will give you a call to help you get through the process.

Get A Handle On Your Debt Repayment

Debt repayment plans are one of the best things you can do for your financial security now and into the future. So if you need to handle your debt, you have to remember these tips. And when a financial emergency strikes, consider a car title loan to get you back to paying down your debt quickly. Fill out the online form now to get the process started.

 

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

 

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