You gotta know how much you owe!
Get out of denial
The easiest thing to do with your debt, is to convince yourself that you have it under control. Or better yet – pretend it doesn’t exist. But De-NILE is a river in Egypt. It isn’t a good space to be in with your debt.
To be able to find a suitable solution, you have to first acknowledge your problem – as well as the extent of your problem. Now, during lockdown – is the perfect time to be doing that. You gotta know how much you owe.
Gather statements of all your accounts – physical statements or downloads. Personally, when dealing with what I owe – I’m old school. I like to write it down on paper. I feel I “connect” better with the figures that way – but an excel spreadsheet works just as well.
Write down the name of each of your creditors, the initial loan amount, the full amount currently outstanding ( aka your balance owing) the interest rate, the monthly repayment due and the monthly payment date. Once you have this in front of you, you will be in a far better position to have an overview of your finances.
Have a payment plan
Pay the minimum amounts due on all your accounts every month. That is non-negotiable. However, if you have extra cash you should have a plan for where you are going to pay it to.
There are 2 common methods utilized. The avalanche method and the snowball method. Since I don’t like interest, I like the avalanche method. List your debt in order of the highest to the lowest interest rates. Even though the outstanding amount on the debt with the highest interest rate may be lower than an outstanding amount with a lower interest rate – the debt with the highest interest rate is more expensive . The avalanche method proposes that you pay your debts with the highest interest rates first.
The snowball method is less complicated. Write down every debt from the lowest outstanding balance to the highest outstanding balance. Then start paying off your smallest debts first. This method will give you great satisfaction, every time you finish paying off an account.
If you are struggling to pay your debts / keep up with your monthly instalments, then you need to speak to debt advisor at NDA as soon as possible. Debt counselling is regulated debt relief option that can ease your financial burden.