It is common for many people to despair over the amount of debt and not know where to start to start payments and start catching up on life. This is really no seven-headed animal and getting out of debt is not as difficult as you may think, but it will certainly require a certain amount of discipline and personal finance organization to get your life right as soon as possible.
There is an old saying that for almost everything in life there is a solution and this is true also for people who want to learn to get out of the red and don’t know where to start.
If you have received any notification that you have a dirty name, do not despair and be calm at this time to be able to reflect very clearly on the best alternatives you should perform as soon as possible.
But your question right now should be: what debts do I start paying first? Debts with higher interest rates?
Learn how to organize debt by priority
Some people end up making some mistakes in guiding debt repayments just by looking at the aspect of higher interest rates, but we will understand a little more about this throughout the article, so it is very important that you read through. and follow the tips for organizing your personal finances and starting your sock as soon as possible.
Tip 1: Financial Worksheet
To explain this situation more clearly to everyone, I often ask you when you decide to perform a task such as cleaning your office or home, if you only clean a small space, or if you already clean all the environment you set out to do. accomplish the task? Normally people respond that if you clean something in half, probably the part that will be dirty will end up dirtying the part that is clean.
Or if you see that your car has a problem that needs to be serviced, but you decide to push with the belly, what happens?
Your car will probably have this problem and some others as a result of this problem. The trend is for the problem to get worse and generate other problems.
But these comparisons are to explain something that many people fail to accomplish on a day to day basis and is critical: organizing their monthly expenses and income into a financial spreadsheet.
Only after organizing your personal finances can you understand how your financial health is. Suppose you realize that there is nothing left every month, so what will you do to start paying off your debts?
If you realize that there will be nothing left over the next few months, consider cutting expenses as soon as possible, because only then will you have the financial upfront to start paying off your installments.
Tip 2: Sort Debts by Priority Order
In this step you will analyze each debt and arrange according to the following steps:
-
Utility Debts
Remember that even the fees for late payment of utilities are not so high, if you do not pay you may have the electricity of your home cut or even have the service of water or gas also cut. Therefore, always prioritize utility payments.
- Debts on Disposable Goods
If you have a mortgage on a property or even a car that is in arrears, try to get organized to make these payments again on time.
Let’s say you found that you were wrong in your calculations and can no longer afford the property. In this case, there is no problem deciding not to want the property anymore, but try to sell as soon as possible to recover some amount invested in your purchase. What many people forget is that they simply think that if you abandon the good, whether it’s a car or a property, you’ll be paying off your debt.
What happens is that the good goes to auction and usually pays a lower value than the market value and you still risk having to bear the difference in value and get the name dirty until you finish repaying the debt.
- Debts for Higher Interest Rates
Lastly, the remaining debts, excluding the above assumptions, are to be arranged at the highest interest rates.
Tip 3: Origin of Debts
Some people from all of the above and can really get their personal finances up to date and consequently get out of debt, but some time later they get into new debt and the debt cycle starts again, so it is critical that you understand the origins of your debt. debts.
Some people get into debt because something unusual came up and had to help a relative, others are always spending too much because they always want to be fashionable. Try to understand the reasons that led you into debt because it will certainly be remedying the problem at its root and will be able to keep your personal finances organized for many years to come.
On this subject there is a very interesting movie that I recommend to everyone called Vicky Boom’s Delusions of Consumption where it portrays exactly this subject and is great for a good family debate.