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TRENDING BASIC MONEY MANAGEMENT TIPS
04.02.2020 / Borrowing « Back to all articles
How to Come Up with a Reliable Repayment Plan
It’s Payback Time
Whether it is the mortgage, student loans or just a credit card, the inevitable time comes when repayment must begin. Unfortunately, many people have no idea where to start and are even unsure where they stand in relation to debts versus income. This seems to be particularly true with student loans. While there are minimums that must be paid no matter what, the ultimate goal is to get ahead and conquer these loans to increase the amount of that hard-earned cheque.
Organize the Various Debts
This is half the battle. Identify everyone who is owed money and organize the debts. Go through all emails and posts, check bank statements, and any other pertinent papers that will give an overall general view of all debts owed.
Another fantastic resource is a credit check. These sources of information should contain every loan taken out on a particular person. Be sure to read your report over carefully to ensure that all information is accurate.
Make a list of how much is owed on each, what the monthly payments are, the interest rates and the payoff dates. Having this information available will give a person a strong overall sense of their debt versus income ratio.
Identify Available Funds
If you haven’t already created a budget, now is the time to make one! If there is not enough money coming in to pay these bills, decide how to deal with the shortage. For example, a second job may be needed in order to regain financial control and provide some relief.
Once everything is accounted for, including the monthly minimums for each loan, evaluate how much is left and determine whether you can spend a little extra paying down your debt. A good rule is to always pay at least double the minimum payment of a credit card bill, if at all possible.
Decide on a Direction
There are several methods for paying back debt, and it really falls to the borrower to decide. One option is to calculate how much each loan will cost over the course of its life with interest factored in, and then put extra effort into paying off the one that will cost the most.
Another method is to pay off the smallest loan first, allowing you to achieve an early victory by eliminating one of your payments. Then add the payment amount from that bill on the next smallest loan. The snowball effect of paying off small loans early and placing that money on the next loan has been used successfully by many people.
Credit Talk
04.02.2020 / Borrowing « Back to all articles
How to Come Up with a Reliable Repayment Plan
It’s Payback Time
Whether it is the mortgage, student loans or just a credit card, the inevitable time comes when repayment must begin. Unfortunately, many people have no idea where to start and are even unsure where they stand in relation to debts versus income. This seems to be particularly true with student loans. While there are minimums that must be paid no matter what, the ultimate goal is to get ahead and conquer these loans to increase the amount of that hard-earned cheque.
Organize the Various Debts
This is half the battle. Identify everyone who is owed money and organize the debts. Go through all emails and posts, check bank statements, and any other pertinent papers that will give an overall general view of all debts owed.
Another fantastic resource is a credit check. These sources of information should contain every loan taken out on a particular person. Be sure to read your report over carefully to ensure that all information is accurate.
Make a list of how much is owed on each, what the monthly payments are, the interest rates and the payoff dates. Having this information available will give a person a strong overall sense of their debt versus income ratio.
Identify Available Funds
If you haven’t already created a budget, now is the time to make one! If there is not enough money coming in to pay these bills, decide how to deal with the shortage. For example, a second job may be needed in order to regain financial control and provide some relief.
Once everything is accounted for, including the monthly minimums for each loan, evaluate how much is left and determine whether you can spend a little extra paying down your debt. A good rule is to always pay at least double the minimum payment of a credit card bill, if at all possible.
Decide on a Direction
There are several methods for paying back debt, and it really falls to the borrower to decide. One option is to calculate how much each loan will cost over the course of its life with interest factored in, and then put extra effort into paying off the one that will cost the most.
Another method is to pay off the smallest loan first, allowing you to achieve an early victory by eliminating one of your payments. Then add the payment amount from that bill on the next smallest loan. The snowball effect of paying off small loans early and placing that money on the next loan has been used successfully by many people.
