How to Settle Your Debt

Whether we like it or not we tend to borrow from someone else to relieve us from sudden economic pressure. We may go to our friends and other companies involved in this business. But people as we are we also tend to forget paying our indebtedness until our debt balloons. So here’s some counter-measure how to free us from debt:

Be conscious of the due date

There might be some companies who give a 15th day grace period after the due date but not so with some who are really strict in observing their collection policies. If this is so, be conscious to pay your dues before the due date comes. Do not consider the given grace period otherwise you’ll fail to pay your dues within the said period and your payment will only be eaten up by your loan’s penalties and interest after you pay. One company I know uses two interest rate scheme in their collection effort. When a borrower pays within the 15 days grace period (yes, they are that lenient) the company only charge a lower interest rate. But if the borrower pays after the grace period the bill jumps to its second interest rate which is higher than the first.

Prioritize payment over unnecessary buying

There might be a sale in town. Cheap items you want to buy are on display. So you are torn between buying the item with the money you’ve intended to pay your debt to or go to your lendor and settle your loan immediately. But oftentimes, logic is thrown to the wind. You choose to buy those items forgetting that an unpaid loan will accumulate penalties and interest. So while money is still in your possession pay your debt promptly to avoid diverting your money to things not presently needed.

Consolidate your loan

If you have several loans with the same type try to consolidate it. Let’s say for example you have used several credit cards, negotiate one card company to buy-out your other loans from other card companies. This is what they call “balance transfer”. How does this work? If one company charges you with 3.5% interest per month of your regular purchases then you “balance transfer” it to other card companies, the card company who buys-out your loan will charge you with lower interest rate plus they also offer staggered repayment scheme for that transferred balance. This way you not only have eradicated the complexity of monitoring different loans but you also have availed a much lower repayment for your several loan under one company.

Arrange salary deduction scheme

If budgeting is not your strength better arrange with the lending company a salary deduction scheme. This way you will be assured that your debt will be paid regularly and promptly thus avoiding accumulation of surcharges and interests. Then you can now have the last say where your take home pay goes without having the burden of prioritizing your monetary obligations.

Adjust your budget

Let us say your disbursement for a month is necessary but after the month ends there are still some unconsumed items. That’s the time to cut-off the number of pieces of those items in your budget list. Cut-off those items too that are not necessarily needed that you can live without. The money you spend in those items can now become your savings or a buffer fund for some emergency situations.

Live within your means

Do not be pressured by the lifestyle of those people around you. Do not try to follow their extravagant lifestyle when you can’t afford it. Infact, spend your money to where it’s worth spending rather than following after what’s “in” of the season. It is better not to be enslaved by what the capitalist dictates. Live within your means.