Is your debt outweighing your income? Are you able to make only the minimum amount due on your credit card? Are you in a financially tight situation with low bank balance? If you are in any of the above situation then it means that you are in debt but it might not be too deep yet. If you don’t start reducing debt now then it might be too late. The question is where to start from?
The first thing that you need to do is create a plan for getting out of your current debts. Your plan should also highlight your current financial situation and status. Check your outstanding debts whether it is that of auto loans, credit cards, student loans, home loans, insurance premiums etc. This will help you in determining what you really need and where you stand financially. Once you have identified your position, it will be easier to revise your budget for reducing debt
If you are unable to make payment for the next month on your loan then call your lender or bank or financial institution. Tell them about your current situation and try to work out a repayment plan under which you will get a longer term and better interest rates. Your lender will be more than willing to work with you on this because if you default on their loan then they will be on the losing end more than you.
The second most important thing is to pay off all the high-interest debts first. The high-interest debts will have a high amount due as compared to low-interest debts, which can be taken care of later also.
The third option is to refinance your mortgage with lower monthly payments. You can get refinancing options from your bank, lender or financial institution.
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