How to get out of debt | Debt consolidation

Planning is the first step to having a healthy financial life. But the truth is that we often spend a little more than we should and end up with overdraft, credit card debts and so on. In other cases, we want to buy a good, such as a car or a house, and we don’t have enough cash to support the dream, often having to resort to other means.

For one reason or another, debt is a recurring reality in the lives of many Brazilians. Therefore, we should be aware of how to get out of debt if this happens.

Choose which debts to pay

money loan

Many times the debt headaches are so great that we just want to get rid of the problem right away. But in some cases this may not be a good strategy. It is not a good idea to spend your entire reserve for low interest debt, such as real estate or auto financing. Especially if there are other debts. It is important to prioritize the most expensive debts, not the longest ones.

Debts with the highest interest rates should outweigh those with lower interest rates. Look for the lender with the biggest debt, try to negotiate and pay it back as quickly as you can. When you delete it, move to the next and so on.

Beware of credit card

Beware of credit card

Paying only the minimum amount on your credit card statement is the same as paying off that month’s interest amount. As a result, this does not write off any of your debt. Thus, it may take years for you to completely settle what you owe and most likely you will end up paying much more than the initial debt value. We have published a guide on how to have good credit card practices for getting out of debt as this is one of the highest interest rates there is. 

Ask for help and try to negotiate

Make a balance sheet to find out how your debt is being written off each month. If you are unable to repay them, seek assistance from a consumer protection agency.

Your creditors should be aware of your current situation. Be aware that just as you are interested in paying off your debts and settling your situation, they are interested in receiving this payment. Your lenders are likely to negotiate a viable way for you to pay.

Look for other ways to get resources

In some cases, it is recommended that you use the money you invest because most of the time, the yield on your investments is much lower than the interest charged on market financing. But stay tuned! This can compromise your long term goals such as buying some good or even your retirement.

Another interesting option is to seek debt portability for another financial institution. For this it is important to do research. Credit unions often offer lower rates than commercial banks for non-profit purposes.Understand, knowing how to work with your debts will reflect on involvement and commitment to change the situation. See which options are best and try to relax your finances. That way, over time, you’ll be able to leave your debts in the past and move on with financial health and balanced accounts. Count on us for any assistance!