No one wants to run into troubles when paying back any debt, but in case the unexpected happens, here are some tips on how to manage through your complicated repayments.
- Contact Your Creditor/ Creditors
The first thing you should do when having difficulties is to contact your creditors and be honest with them. No one wants to have their trust broken, and it is their right to know. In letting them know in advance, you may be able to work out some extensions and prevent having your arrears reported to the credit reference agencies. While you are not guaranteed that you can protect your credit score this way, you’ll be surprised that many lenders only need their borrowers to assure them that payments will be made no matter what, and they’ll be willing to cut you some slack.
- Negotiate an Appropriate Repayment Term
In many cases that you’re having trouble making ends meet, the best option would be to negotiate a suitable repayment scheme, such as stretching your repayment terms in order to lower your interest rates. While this could most definitely mean you’ll be paying more in the long run, it may be a wise compromise to make until you are back on your feet again.
- Refrain from Taking in More Credit
One of the most common mistakes people make when having trouble paying back their dues is getting another type of credit to cover for present obligations. Unfortunately, this doesn’t solve the actual problem, but you’re basically just delaying the inevitable. In the end, not only will you have paid more in interests, but you will have suffered more physical and mental stress the longer you dragged on your debts.
- Cut Back on Your Expenses
Once you’re beginning to feel the weight of all your debts, it’s high time you focus on ways to cut back on your expenditures in order to free up more cash to be used on your repayments. Your priority is to list down all of your expenses in a month, ad look for areas where you can save cash. Even if you think that every type of expense written is important, we can guarantee you that there will always be ways to save.
For instance, food is a necessity, and is one thing that cannot be taken out of your monthly budget. But by cooking your own meals, packing your lunches, and skipping the morning coffee at the café, you can easily reduce your monthly food expenses by 25% to 50%.
- Find Extra Sources of Cash
If cost-cutting doesn’t seem enough, then you may also have to find other income sources. It could be that you only need to take extra work during the weekends, or go as far as working 16 hours a day, depending on how large your outstanding debts are. This often calls for a huge sacrifice, but think about whether you prefer being exhausted from too much work or from too much debt.
- Seek Debt Advice
Debt problems can be very stressful and can affect your thinking. Please don’t make rash, major decisions, such as consolidating your debts against your home or filing bankruptcy especially when you’re confused. While these may be the soundest options in some instances, always seek professional, debt advice service before proceeding.