A Guide To Paying Off Debts On Time

by on June 13, 2018

No matter how hard we try to keep ourselves out of debt, one simple financial emergency or a bad month can lead to more debt than we know how to deal with. While unsecured loans could provide a much-needed solution in a financial emergency, being able to effectively pay it back in time is a skill that many still struggle with on a daily basis. To give those of us in a bit of debt trouble a helping hand, we’ve put together a guide to paying off your debts on time. Keep reading to find out!

Prioritize High-Interest Debts

First things first, you need to make sure that you’re paying off the highest interest debts first. Whether you have a monetary surplus to throw at your amounting debts, or you’re struggling financially and need to be careful with what you send to which debt, being able to effectively prioritise the debts you have is a must. The Money Advice Service suggests splitting your debts into three categories – Priority Debts, Non-Priority Debts and Debt Emergencies. Essentially, emergency debts are any from which you are facing action such as court orders, bailiff action or eviction, while priority debts are those with higher interest rates or that could carry serious consequences when not paid. Non-priority debts could be appeased by paying the minimum when it’s required.

Make Sure You Pay At Least The Minimum

Regardless of the priority order of your debts, you need to ensure that you’re paying the minimum amount for all and then putting any extra towards those that require priority attention. By paying the minimum on all debts, you can prevent any potential legal action from lenders or having to go without essentials like water or electricity if these debts aren’t paid on time. Starting at the minimum and then worrying about working upwards will help reduce the stress too.

Consider Low-Interest Solutions For High-Interest Debts

It may seem like a backwards solution, but when things get particularly tough, taking out a low-interest or 0% interest loan or credit card could help provide you with emergency relief from high pressure or high-interest debts. This way, you’ll have the same debt, but without the risk of having to pay more through rising interest fees. Arranged overdrafts with your bank, 0% interest credit cards or personal loans with periods of no interest can be a simple way to pay off what needs to be paid off and then consolidate all of your debt into one single payment on a no or low-interest solution.

Pay Before Saving

As useful as savings can be, ensuring that you’re paying off your debts before you start saving where possible is a must. Your debts will add up and any savings that you do have could easily be swallowed up if you reach a point where you are unable to pay off what you owe. Instead, focus any spare money you have into paying off urgent debts and getting yourself free of these monetary pressures before you start putting your time and energy into building a substantial savings amount.

Get Advice

If all of the above still aren’t quite cutting it, now is the time to seek out professional advice. Free debt help is available from all kinds of sources, including government-funded institutions, financial establishments and in some cases, even finance bloggers will be willing to pass on more of their wisdom. Whatever the case, never be afraid to ask for help. Most debt advisors can even talk to the lender or even court or bailiff for you, so it’s worth asking for help when it’s needed.

Paying off your debts isn’t always simple, but knowing where to start can give you a much-needed leg-up regardless. By prioritising what you need to pay, ensuring that you’re paying off the minimum where possible and getting advice when it’s needed, you can better organise your debts, the relevant payments and ultimately set yourself on the way to being debt free.

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