The new year is always a good time to evaluate all aspects of your life and set new goals. As a result of rising unemployment, increasing living costs and an economic slowdown due to Covid, debt repayment may be at the top of your resolutions list.
Budget Review
An effective budget takes into account your net income and all living expenses. It is often easier to breakdown the expenses into two sections – fixed and variable. The variable expenses and luxuries are the red zones where we tend to overspend.
Just as important as setting your monthly budget is reviewing your actual expenses at the end of the budget period. A thorough review of your expenditure highlighting where you overspent to keep an eye out on those expenses in the future and also to make adjustments to your budget.
Paying off Debts
It is very important to keep up to date with all debt payments. However, if you intend on using debt to pay off other debt, think again. Borrowing from Peter to pay Paul is only fooling yourself and will ultimately leave you in a worse financial position. To preserve a good credit score, you must be up to date with all debt repayments and make sure any arrears are caught up.
If you have excess funds available, we strongly recommend that you pay a more than the minimum repayment to your more expensive debts such as credit cards and short term personal loans which generally carry interest rates of between 20% and 60% per annum. Any additional payments made can save you a substantial amount in interest charges and fees avoided.
Struggling to Pay Debts
If your debt repayments are too high, there are two main debt consolidation options available to consumers;
Consolidation Loan
A large personal loan that is used to settle smaller debts and leave you with just one installment and one loan. Consolidation loans are effective but have strict qualification criteria. Consumers should be up to date with all payments and have a high credit score to not only qualify, but also obtain favorable interest rates.
Debt Review
A solution where a debt counsellor formally negotiates with your creditors. Monthly installments for all of your accounts are consolidated into one reduced and affordable payment, with lower Interest rates and legal protection from creditors. Consumers in arrears and those with low credit score will qualify for debt review, with the only requirement being that the consumer is employed.
Fix Debt Can Help You
To consider whether debt review may be a viable solution to fix your debts, feel free to complete our CONTACT FORM and one of our experienced consultants will give you a call to discuss your financial situation and advise on how we can assist to reduce your monthly repayments.