Make a budget
Determine your monthly income and expenses. Develop a spending plan with a focus on paying off debt. Take a look at your expenses and highlight those that you can cut. If, for example, you eat out every day for lunch, start cooking at home and taking food with you to work. Switch from a taxi to a bus. Move your get-togethers with friends on Fridays from the restaurant to someone’s home. At first glance, these are small things that do not have a serious impact on the budget. But overlapping each other, they turn into real black holes, where the lion's share of income goes.
Prioritize debts
Determine which of your debts have the highest interest rates. Prioritize and pay off debts with the highest interest rates first. This is called the snowball strategy. The bottom line is that people choose from their loans the one for which they need to pay the least, and strive to close it first. Available funds are spent on its early repayment, and the lower the minimum payment becomes, the more a person pays on top of it (this is called an “overhang”). For other obligations, the borrower pays the minimum amount agreed with the bank: their turn will come later. As a result, the smallest loan, on which the main efforts are devoted, turns out to be repaid faster - and the turn moves on to the next largest loan. As the credit burden reduces, the financial pressure on the borrower decreases, and the amount of available funds grows like a snowball. They are used to repay the remaining loans according to the same principle as before. If several loans are of the same size, it is better to give preference to the one with the highest rate.
Interest rates
Consider negotiating with creditors to lower interest rates. By the way, here we talk about how restructuring differs from refinancing.
Avoid new debt
Review your spending habits and avoid new debt. Approach large purchases carefully, weighing their financial consequences.
Stimulation
Monitor your progress and update your budget regularly to ensure you're on the right track to managing your debt.
Source: https://prodengi.kz/post/kak-upravlyat-dolgami
Photos are from open sources.
