I’m in debt! And now, what do I do to solve my problem?

by Erik Vogt

For those who think “I’m in debt” and soon feel a cold sweat, our first tip is to stay calm. Debts are synonymous with despair, but we explain that you can renegotiate them and get out of the red.

No one is immune from making some debts. However organized you may be, there may be a slip here, an overspending there and that’s it: you’re already in debt. If you can repay these debts very quickly, do not hesitate to do so. But otherwise it is possible that they only increase, increase, increase … So, what to do?

No need to be desperate! A beautiful and widely used alternative is debt renegotiation. With a few tips, you can take a breath and better organize yourself to get out of debt.

Are you in debt? Get organized!

debt

Before making any decision, you need to know: How much do you owe? Separate your paper, pen, or Excel spreadsheet and start recording absolutely all your debts, however small. That way you can get an overview of what the situation is and move on to resolution.

Still in this flow of spreadsheets, take a look at your monthly budget. We teach how to make one here, take a look. So you also have a sense of how much of your income can be used – or not – in the discharge process.

Prioritize payments

Setting priorities is very important not to get lost in which debts to pay off first. If you have a choice, choose those that are tied to the house or car – so you don’t risk losing those staples to the bank.

Choose your strategy and clear all your doubts. When it comes to negotiating, it is worth asking everything: if cash is discounted, how much interest will be added if the amount is paid in installments, how long the situation will be settled, if you receive a letter of discharge. It is important to make everything very explicit so that there is no communication noise later.

Set aside a portion of your income for these payments, but not much. In desperation to get out of debt, we may end up making new ones and getting into a snowball. Ideally, this should amount to a maximum of 30% of net income – more than that can hurt your budget.

Avoid seeking easy credit and falling for scams

In desperation, we may end up resorting to so-called miracle alternatives, such as easy credit or products that promise to help you. Be very careful! These options may have implicit rates that will hinder you more than solve your problems. You better get organized and try to stop being in debt with larger installments than resort to immediate solutions. Be aware that some lenders renegotiate up to 80% of your debt, so no hasty decisions.

That said, also pay attention to discounts. Always pursuing the lower values ​​is excellent, but it is better to pay a higher value if the discharge time is shorter. The idea is to get rid of it as quickly as possible and without spending too much on debt.

After all the alternatives you are still unable to pay off your debts, consider getting a loan.

It is an alternative that also involves expenses, but with lower interest and more affordable rates. It’s preferable to swap that bunch of interest, fees, and huge fines for smaller loan amounts.

Are you in debt? Astro Finance helps you!

If you don’t know what type of loan to apply for, come talk to us! Astro Finance specializes in finding the loan that best fits your needs, and the best is that it’s free. A good thing to be reading, isn’t it? Negotiate your debts and get out of the red: This is the first step to investing in healthy financial stability.