Knowing how to get out of debt is not easy only if you do not have a clear methodology of how to do it and the self-discipline to achieve it.
For many Mexicans, debts are a monster that grows without us noticing and also steals your tranquility and well-being. Here we will reveal how to leave doubts without stress and without losing the satisfaction of buying what you need.
What to do to end the debts?
To end the debts of credit cards, it is best to follow these steps:
- Identify how much you owe on each of the cards
- Identify what is the interest rate charged by each card
- Pay a little more than what you are marked with “Minimum payment”
- Increase each month that extra you make the “Minimum payment”
- Store your credit cards in the back of your closet
- Structure a debt payment plan
- Look for options to consolidate your loans Consolidationnow.com/payday-loan-consolidation/ and obtain a lower interest rate
- Use your savings to eliminate the debt as soon as possible
- Borrow from family or friends with a real commitment to pay
- Analyze your belongings and evaluate what you can convert into cash
To end other debts, such as debts with friends, family or suppliers, follow these steps:
- Identify how much and to whom you owe
- Analyze your income and expenses to know how much you could allocate to the payment of debts
- Analyze your belongings and evaluate what you can convert into cash
- Negotiate with your friends, family or suppliers to extend the term or get a discount for prompt payment.
- Ask for a payroll loan so you can pay comfortably month by month
The steps that accelerate out of debt
Accelerate the time it will take you to get out of debt is possible if you meet two basic premises:
- You have ordered in your financial life
- You have the INTENTION to get out of your debts
There is nothing more powerful than having the firm intention to take action to settle your debts and organize your personal finances so that you become aware of how much you owe, how much you can pay and when you will be free of debt.
Imposing order in your financial life will make you run towards the tranquility of seeing your economy healthy, making the necessary expenses inadequate time and with the necessary conditions.
You will not let me lie that spending on impulse, without thinking, many times makes us prisoners of a monster that eats our tranquility and well-being.
On the other hand, the fact that your intention to get out of debt is firm will help you analyze your daily expenses and objectively evaluate what expenses you can reduce, what expenses you can eliminate and what expenses you should continue to make so that you have a pleasant life.
It is not about suffering every time you think about your personal finances, it is about allowing yourself to think that it is real that you can get out of your debts little by little by being persistent.
What is behind the indebtedness with credit cards?
We will analyze everything that is behind the indebtedness with credit cards from two points of view:
1.- Behind the motivations of the user of the credit card
Expert psychologists and behavioral economists have revealed that there are two fundamental reasons why we prefer to pay with credit cards instead of paying in cash and that causes us to spend much more than we really need.
The first reason to spend more with a credit card: The act of taking cash out of our pocket and giving it to someone else, provokes a sense of “loss”, is to feel that money is getting out of hand and will not return. We feel the act of spending in a vivid and somewhat painful way.
The second reason to spend more with a credit card: Paying with a credit card is a much more pleasant sensation because besides that we do not see the money in cash, it is very easy to sign a promissory note, which represents a number. Paying with a credit card is an act where money moves in an abstract way, we are not suffering the loss of money.
Nothing is easier than taking out the credit card and feeling “the power of the signature”.
These two reasons are what lead us psychologically to prefer paying by credit card and that has as a natural consequence to spend more.
2.- Behind the terms of the credit line.
There are advantages and disadvantages behind the credit line conditions of your cards. There are ways to save and take advantage of credit and there are ways that can get you into debt more.
There are ways to take advantage of credit cards if you know how to use them properly and you know the tricks to avoid paying too much interest.
We go to the key points that help you to TAKE ADVANTAGE of the credit cards:
Advantage 1. Know your cut-off date to extend the payment term.
Knowing your cutoff date will allow you to plan purchases to have “more time to pay.” Usually, credit cards set the payment date between 20 and 30 days from the cutoff date.
Therefore, all purchases that you make very close to the cut dates will only take between 20 and 30 days to pay, but if you make your purchases in the first days after your cut date you will have between 40 and 60 days to pay.
Plan your purchases in the first days after your cut-off date so you can raise enough money to pay on the date that you require payment and do not pay interest on those purchases.
Advantage 2. Ask for months without interest and make payments without arrears
There are promotions offered by commercial establishments for months without interest.
In addition, on the other hand, there are possibilities that you request directly from the bank of your credit card that some special purchases you made give you terms without interest. Call the customer service numbers of your credit card by telephone and ask for these options personally, you will surely have pleasant surprises.
The most important thing to prefer interest-free payments is that you do NOT fall behind in making the corresponding payments.
If any of the monthly payments “without interest” is over, and you do not generate the corresponding payment on the date indicated, then they will begin to pay interest on that expired monthly payment.
Then you will be paying interest and it will not do any good to have requested “months without interest”.
Advantage 3. Know your interest rate and compare it with other options
Knowing the interest rate of your card is essential so you can decide with what card you will have to make your expenses.
You will end up paying more interest if you decide to make large purchases with a card that has a higher interest rate.
Therefore, it is more advisable to analyze and decide:
- Select the cards with high interest to make small amount expenses and you know that you will have the money to pay them in the deadline in full.
- Select the cards with lower interest to make large expenses that you know you will take longer to pay.
Now that you know how to take advantage of your credit card, we will analyze the key points of DISADVANTAGE that can lead you to a greater debt in credit cards so you can be more careful.
Here the 3 basic precautions that we advise you to take for the administration of your credit cards.
Caring 1: Avoid charging fees
If you are not aware of the payment deadline and you pass the corresponding payment, your debt will be increased by “Collection expenses”.
This amount will also be added to your “Total debt” in such a way that if you only pay the minimum required, the collection expenses will be added to everything you owe and the following month, you will be paying interest and VAT for that amount of penalty for not having paid on time.
The most advisable is to pay “Balance to not generate interest” in full before the payment deadline.
Care 2: Keep track of your purchases
Although every day, banks are implementing more security to prevent you from being a victim of a credit card cloning, it will always be good to keep track of your purchases and monitor your account statement.
You do not want to pay amounts you did not make, let alone interest on purchases you did not make. Then it will never hurt, that you be vigilant of the details of your account statement.
Care 3. Pay the total of the “Balance to Not Generate Interest”
One of the main mistakes that are made and that make debts grow as foam without control is to pay the “Minimum Balance”.
Paying the minimum amount means that the credit card will be charging you interest for the entire unpaid balance. That means that you will be paying interest more iva month to month and that amount can be increased over time if you do not pay the total “balance to generate no interest”
Care 4. Know the annuity fee
Credit cards charge an annuity fee for the use of the card, it is important that you know what the amount is and when your anniversary of use is fulfilled so that they know in which month they will be charging that amount.
We do not want you to be taken by surprise by collecting that amount and take your budget out of balance, that is why it is most convenient for you to know the exact month in which this fee must be paid and have enough money to pay it.
If for some reason you can not pay that amount on the indicated date, then you will be paying interest and VAT.
X-ray of debts
We will clarify how debts are structured so that you have a broader vision of how they grow.
Let’s take credit card debt first so we can see what are the parts that make up the total debt.
How to live without debts
Living without debt is achieved by knowing the banking system with its costs and taking control and mastering the advantages without being dragged down by arrears.
It is not about fleeing credit cards and any relationship of banks, but to take advantage of financing for your benefit.
There are studies that reveal some characteristics of people who live without doubts, analyze those characteristics and observe closely how they do it so that you can copy their behavior.
Feature # 1: Take care of the details
People who live without debt focus their attention on the details of everything offered by credit lines and all the movements of their own personal finances.
They know completely what they earn, the fixed expenses they have to do every month and how their personal and family budget is made, even considering extras for contingencies.
They also know when they can make purchases, which naturally makes them less likely to make impulse purchases.
Feature # 2: They know how credit lines behave
They know the exact meaning of debts and the impact they can have on their daily lives. They know that debts can offer something useful and take advantage of financing times, but take care not to pay interest.
Feature # 3: They are patient and persistent
One of the main virtues of people living without debt is that they recognize what is the right time to make a purchase and do not move forward. They distinguish between what they need to buy and what they want to buy.
They avoid to satisfy a desire immediately but do not stop enjoying the purchases that make them feel good. In this way, they make smart decisions all the time and know that if they can not buy something immediately, they will wait to save to get it.
Feature # 4: They are simple
They are people who do not complicate their lives and have a simple solution for any financial problem that may arise. They know how to evaluate costs and benefits very well and they are guided by what brings them more benefits or fewer costs.
Feature # 5: Compare prices
Living without debt has a clear base in price comparison. We live in a digital era where any information you need is in the palm of your hand (on your mobile) and today there are thousands of ways that with a single click you can have the prices of what you need to buy.
For example, to make purchases from your pantry, do an exercise by visiting the websites of supermarkets that offer “Buy online” and compare prices. You will be surprised that there are products that have very high variations between one supermarket and another.
It is not a matter of being “stingy” but of understanding that there are products that do not have to pay a high price if we can pay less.
People who live without debt will take the option that implies savings.
Feature # 6: They are responsible and enforce their word
One of the basic characteristics of people living without debt is that they are responsible for their own financial lives and respect their commitments.
The reality is that debts rise quickly when constant arrears are incurred. Respect the dates of payment and respect your personal budget are the key to living without the stress of being in debt.
How to get out of debt with a loan?
Although in appearance it could be thought that it is contradictory, it is not. Getting out of debt can be achieved by acquiring a quick personal loan.
Quick loans without consulting the Credit Bureau are a very useful tool to stop the increase in interest on credit cards and become an alternative to quickly and optimally decrease the number of monthly payments required by credit cards. credit.
To know if taking a personal loan quickly and without consulting the credit bureau is a good option to pay the debts of the credit card, consider if you are in the following conditions:
Request a personal loan quickly and without consulting the Credit Bureau If you meet one or more negative conditions on your credit cards, you are at the ideal point to evaluate the possibility of obtaining a quick personal credit and allowing you to stop the wave of stress that generates the credit card.
Negotiations allowed to say goodbye to your debts
The circumstances of life can change from one moment to another, unfortunately not everything is static in life, but we are constantly changing and many times our finances are affected.
An illness, unforeseen purchases, a separation, or even support for a family member or friend can impact our personal finances.
In these situations the negotiation with the cards is possible, but you have to take care of the following details so that it really suits you:
1.- Investigate if your credit card has any support program for eventualities.
Some credit cards have as a benefit, support a couple of months of not paying the balances if you are in difficult living conditions.
They are usually short-term supports that help you quickly but that the period of support is very short. If your unforeseen plan that your life will be normalized in more than 2 months, this type of support is not the most appropriate.
2.- Request to defer some purchases to months without interest.
Credit cards are open to deferring some types of purchases to months without interest, in this case, you would have to call the bank and ask if they have activated these options for you.
3.- Restructure the debt
Before reaching this point, we recommend you to see the option of requesting a personal loan, fast and with better conditions.
But if you no longer have that option only then we recommend you use the alternative to restructure the debt.
Restructure the debt is to start a negotiation directly with the bank to “freeze” the use of your card, and you can pay the debt to months.
The disadvantage is that sometimes, the banks condition the restructuring to which you will not have access to use the card while it is restructuring in action.
4.- Negotiation for cancellation of the line of credit
This is the last alternative that we suggest, usually, to reach this type of negotiations is because they stopped paying several months monthly payments requested by the bank.
In these cases, it is most likely that you have negative marks in your Credit Bureau that will affect you in your future financial life.