Despite the advice of financial experts to stay away from debt, the reality is that many people today continue to be burdened by multiple debts from different lenders. Unfortunately, once you start getting into debt, it is hard to get out of it. The worst part is when disaster strikes, and you lose your employment, you’ll have the additional burden of finding a monetary source to settle your obligations. Therefore, if you have a lot of debt, you need to make sure that you are managing it well. The best tip, of course, is to stop borrowing, but if you can’t avoid it entirely, here are five practical tips for getting your debt under control.
- Consolidate all your loans
One of the most common ways you can effectively manage paying off multiple debts is to consolidate them by applying for a personal loan. Personal loans are available through banks and other alternative financing institutions. There may be a few differences on how personal loans are structured from one lender to another, but the general purpose and structure are similar. To further illustrate, a review of Marcus by Goldman Sachs mentioned a few unique features including no restrictions on the loan, allowing the borrower to allocate the funds however he may do so, fee-free application, and the option to personalize payment terms. LightStream, an alternative lender on the other hand, offers a higher loan amount but the APR will vary according to the loan purpose. Thus, before making any decisions, always check the individual features of the loan to know whether or not it will work to your advantage.
- Come up with a debt management strategy
Many people seek counselling from experts on how to settle their obligations. But credit counselling comes at additional cost, so coming up with a plan that works for you is a more economical option. For some, drastic methods may be necessary, but if you feel that you are still capable of getting your loans under control, you can start off by putting a cap on your borrowing. Until you can bring down your debt to a comfortable level, don’t entertain the possibility of applying for any new loans. In the worst case, you may also turn to the government for financial programs.
- Negotiate a lower rate
It won’t hurt to negotiate with your lender to see if you can get a lower interest rate. If you can consolidate multiple loans by applying for a personal loan with a lower interest rate, then don’t hesitate to do so. Keep yourself up to date with how the market is doing so that you can take advantage of better rates from your lender.
- Be up-to-date on your payments
Paying late is never an option if you want to keep your credit rating high. If you are taking on too many financial obligations and you are already struggling to pay them, you might want to cut back on other expenses to ensure that you keep your loan payments a priority.
- Pay more than what is due
Anytime you have extra funds on hand, consider putting some of the money to pay off your loans. This depends on how much actual debt you are paying. If your loans are a considerable burden, the earlier you get rid of them, the better. Extra loan payments will not only speed up paying off your loans, but they will also have a positive impact on your credit rating.
Image: Pixabay.com
