Personal Finance Wellness.

You won't be free until you are financially free!

Debt

How Much Debt Is Too Much Debt?

Debt and indebtedness are an integral part of financial and commercial activities. The employee and the employer do not know, and everyone has tasted it in some way. We can say that almost everyone in society is in debt:

• A person has borrowed money to buy a house and is paying its installments;

• A person has purchased a vehicle and issued a check to pay for it;

• Someone hires an employee and has to pay every month;

• Someone borrows money to start a business and has to pay it off soon;

• A person has received a service and is scheduled to pay for it a month later;

• A person is negligent in maintaining a loan and must pay the damages;

• And dozens of other small and large cases.

All of them are debts, and having these debts as long as that person’s income and financial resources are sufficient to pay off these financial obligations may not be a bad thing and should be considered a normal part of financial and business activities.

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But the situation worsens because, in the financial balance of life and business, the cost burden is heavier than the income balance. It is here that people gradually fall into the valley of debt, and when they come to, they find themselves in the depths of a valley of financial obligations that they are unable to meet and cannot rise above.

If you are reading these texts, you are probably in debt’s seemingly endless debts, or you know someone around you with these conditions.

In the following comprehensive and practical article, you will learn how much debt is too much debt and how to get rid of debt and be on the path to wealth and financial success.

Things that show you have a lot of debt:

  • Your income is less than your debt:

It is the first sign of over-indebtedness. If you do not have enough money to pay off your monthly debts, there may be some debt left each month, and the accumulation of these debts will increase your debt.

  • Avoid answering creditors’ calls:

When you refuse to answer to the lender or creditors, it means that you do not have enough money to pay the debt and your debts have increased.

  • You get help from a loan to pay off your debt:

If you can not settle your debts with your monthly salary and borrow to pay them, it means that you justify by a lack of money and a lot of debt. But keep in mind that accumulating these loans will ultimately make it harder to settle your debts.

  • You have financial stress:

If you are worried about settling your debts in such a way that your peace of mind is disturbed constantly, you have lost control of your debt, and your debt has increased.

  • Use the money you save to settle your debt:

If you can not settle your debt with your monthly income and use the money you have already saved to settle, it means that your debt has become more than usual. In such a situation, imagine that you have no savings. If so, your financial stress will be multiplied.

  • Hide your expenses from others:

If you do not want to talk about financial matters with your friends or acquaintances, you are probably in a lot of debt.

  • To escape financial stress, you become depressed and turn to alcohol and drugs.

But what can be done to get out of high debt?

  • Keep notes of your monthly expenses:

Find out what your monthly salary is spent on. You must first identify the problem so that you can find the right solution and treatment for it. Making a list will help you a lot. Try to make the list honest. It will help you to reduce your financial difficulties in the long run.

  • Do not spend more than your balance:

If you do not have enough money to buy something, do not borrow it. Of course, this depends on what you want to spend the loan on. If you want to invest in your company or buy a house, there is no problem with borrowing. Because the profit made in return for this work is worth taking that loan.

But it is not wise to borrow money to travel or buy a piece of furniture. Also, car loans can be dangerous. Because the car loses its value after the purchase, and if you can not pay the car installment and have to sell it, you will suffer a lot of losses.

  • Start a side job:

Starting a business is never easy. Sell your products online! Do you love animals? Do you have good eyes and a beautiful camera? Start taking photos and selling them.

  • Start by paying off the heaviest debts:

Of course, this does not mean that the amount of debt is heavy. Maybe a debt prioritized due to the demand for unbearable work, or a debt to the bank because of the interest it has and its amount increases with each passing day, so listing the debt will be a very effective method according to priority.

In this way, noted that the payment of part of the debts reduces their priority. For example, the updated payment of a bank loan that no longer includes interest or part of the debt of the work-seeker payment will cause him to be more tolerant of taking the rest of his demand. Identifying and applying these items can reduce the overall debt pressure. Identifying these items can reduce the total financial pressure.

  • Selling unused items:

Using this method, you can provide part of the required cash. Selling unnecessary items that are not used even for a year will not only create a freer space at home but will also help pay off some of your debt.

  • More work, more income:

Flick to your mind. To pay off your debts as soon as possible, you have to work harder. Now this includes overtime and a second job. So go to them to get rid of this problem as soon as possible.

  • Reward yourself:

Reward yourself when you reach your main and small goals! Be aware that we do not want to fall into the debt trap again after dinner, and spending 100,000 dollars is not news! You can buy yourself a cup of coffee or small things that make you happy, or you can even show off your success on social media, but in the end, with the end of your entire debt, you will be allowed a small party with your loved ones!

Conclusion

In this article, we talked about the signs of debt and then introduced methods for debt settlement. You need to make a statement of all your debts as well as your monthly salary and balance. Using this method will help you pay off your debt faster.

“If you have any feedback about how much debt is too much debt that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Credit card

Best Way To pay Credit Card Debt Off Fast?

If you keep your capital on several credit cards, you are probably lucky enough to have the cost of repaying your debt. If you can not pay off your credit card debt every month, optimizing your salary is the best solution. Pay the lowest interest rate and save more money. Start by paying the minimum installment amount specified on your credit card debt, and then try to settle your high-interest debt first.

Mistakes in Paying Credit Card Debt:

  • Do not hurry:

Researchers in a study by the National Bureau of Economic Research believe that people do not use good mathematical logic to repay credit card debt because they tend to ignore interest rates.

The study found that the average household with two credit cards in the UK pays $90 more per year in interest due to incorrect pay splits. Most indebted households with more than five credit cards pay $1,000 a year in unnecessary interest, which could be avoided by focusing on paying off the credit card debt at the highest interest rate.

While many people pay off their small debts for the first psychological victory, scientists have found that they have lost large sums of money due to interest rates because they have used the “payroll” method.

“Compliance with salaries” Excluding mathematics and logic means that the debtor waives money for his entire debt. For example, you owe $5,000 for one card, $2,500 for another, and $1,200 for debt. Scientists have found that an average person pays $800 for higher debt and $400 for lower debt, regardless of interest.

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This does not mean that we have to pay extra for interest, but scientists have proven that the human brain is prone to making mistakes because the first number we see in credit card documents is the total amount of inventory, not the percentage of interest. This total amount of debt affects our minds a lot and causes us to make the wrong decision.

Do not fall into the trap of repaying credit card debt:

Another mistake we make is focusing on just paying the minimum amount offered to us. Do not do this. This is a psychological trick that credit card banks have designed to get the most out of it, even for years.

Economists certainly refer to written numbers as traps, such as the minimum amount to be repaid. The human brain is quite consciously inclined to make decisions based on the first available information (bank traps) so most of us have a laid back attitude when it comes to painting a picture of ourselves. Question: Why do you ignore the offer that is based on statistics? Answer: Because you are trapped in a trap.

A 2017 study by Canadian Transactions found that 47% of Canadians pay off their credit card debt in full each month, 39% is unsure whether paying more than the specified amount is the right thing to do and 10% each pay exactly the specified amount per month.

Repayment of high-interest credit card debt:

You see, I agree to cooperate with creditors (credit card banks) in the field of timely payment and the amount of the specified amount, but if you let the credit card documents convince you that the minimum amount specified for repayment, the maximum amount You can pay, it will cost you a lot.

Suppose you have a $2,500 credit card with a 19.99% interest rate of about $75 a month. And suppose you do not ask to add to your inventory. With that in mind, it takes sixteen years and eight months for you to zero your debt. Of course, you pay $2,862 in interest to the bank during this period – in other words, repaying this amount will cost you about $5,362 during this period.

Do you really want to get rid of that credit card debt and not pay extra interest? So ignore the word of the banks and pay $100 a month from your debt.

If you pay only $25 more than the minimum repayment amount of $75, you will get rid of your credit card debt 13 years and 11 months earlier, save $2,101 in interest and pay only $760 in bank interest. And most importantly, your debt will be zero a decade earlier. No wonder why banks like to pay only the specified amount.

How to Accelerate Credit Card Debt Repayment?

  • Normal payment:

Payments may be made at any time as this will reduce the down payment. Sometimes it is better to refuse to buy goods to pay off your credit card debt as soon as possible. In practice, the borrower has to pay a monthly double payment.

  • Payments that are not in the debt repayment plan:

Banks often issue regular payment plans with card payments. The credit card is calculated for the entire duration of the agreement. Therefore, maturity can be calculated one year in advance. Such a plan is beneficial for the bank but not for the borrower because the program is designed to maximize the overpayment. Therefore, it is more profitable for the borrower to pay the maximum amount possible to pay off the debt faster and minimize the overpayment.

The refund program is done without re-depositing funds from the credit card. If you make such a payment plan, you will not be able to repay the debt even during the year.

  • Develop a new payment plan:

If you no longer need to use a credit card and want to deactivate it, you can call the bank. The bank employee should clarify the size of the debt and prepare a new repayment plan with it. To do this, the borrower must determine the maximum amount he is willing to refill his credit card each month so that he can have the money to meet his current needs.

Reconciliation should be done periodically to ensure that payments are fully received and credited. You can do this at a bank branch, in your personal online bank account, or by contacting the center operator.

  • Disable additional services:

If you pay for all additional services, including SMS alerts on budget receipts and fees, internet banking, and payment. At first glance, the cost of such services is small, but refusing services saves money and sends money to pay off debt.

Conclusion

In this article, we explained how to solve the credit card debt problem and reduce the total amount. The bottom line is to get rid of debt as soon as possible by paying the lowest possible interest; you have to pay off your debt strategy and prioritize high-interest debt and pay more than the amount specified by the bank. The formula for solving this problem is really simple.

Today, millions of people receive credit cards at banks because they have many benefits, including easy registration. This method allows you to solve temporary financial problems and buy necessities.

“If you have any feedback about the best way to pay credit card off fast that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Debts

What Is Bad And Good Debt?

What Is Debt?

Debt is a financial obligation that we must fulfill in the near or distant future. That is, we buy something today to pay for it in the future. Buying a car in installments, taking out a loan, and the like are examples of debt.

How To Distinguish A Good Debt From Bad Debt?

Do you think debt is good or bad? Is debt good at all? Many financial advisors believe that there is no good debt and there is no way to determine good debt. They all even advise you to clear your debts as soon as possible and avoid debt and borrowing as much as possible. But is this always possible? Is this the best advice?

In this article, we intend to counter this argument. When debt is actually a good thing, it does not mean that it’s always good to be in debt, but a certain debt, under certain conditions, and sometimes better that does not exist at all.

This post contains affiliate links. Please please read my Disclaimer for more information.

I think debt can be good as long as we know we can take advantage of it.

At the beginning of the discussion, I need to explain that, in the opinion of Mr. Robert Kiyosaki, the author of The Rich Dad Poor Dad, debt comes in two forms. Good debt and bad debt.

What Is Good Debt?

According to economics, good debt is a debt that can have a higher interest rate than the interest paid on it.

In fact, good debt; is a debt, which has a low-interest rate and is used for investments such as buying a house, turnover required for a business, or a special investment with a reasonable income.

Good debts are the ones that make money for you. These debts are actually a kind of investment in a sector so that you can pay off your bad debts from the profit of that investment.

If your debts are not yet high enough to get out of control, it is best to learn how you can pay your own salaries and create new income models for yourself.

So debt is not a bad thing and can even pave the way for us to get rich. So we need to gain financial intelligence and knowledge to understand how to get into debt properly and how to manage debt.

Good debt is a debt that:

  • It benefits you.
  • It generates a revenue stream.
  • Adds to your assets.
  • It is profitable for you.

So develop good debt!!!

What Are The Bad Debts?

We can all get into debt for a variety of reasons. For example:

  • To borrow a house, we borrow money from friends and relatives;
  • We have little money to buy tools and we borrow from others;
  • An unexpected thing happens that we do not have enough money to cover;
  • We take money from others to finance a business;
  • And dozens of other reasons…

Now there are some debts that the creation or continuation of which can eventually cause financial crises. In general, any debt that results in less than what it owes is bad debt.

For example, some people go to another loan to pay the arrears of a bank loan or to settle it. In most cases, this only changes the nature of the debt and even increases the number of debts in the long run.

Undoubtedly, such debt is considered a bad debt and keeps the person in debt and may even lead to the accumulation of debt for him. For this reason, we suggest that you answer this question whenever you want to create debt for yourself:

Is the result of this debt greater than the benefit it owed us?

If the answer is no, try to reconsider your decision to create that debt by thoroughly examining the aspects.

Bad debt is a debt that:

  • It will cost you money.
  • It will do you a disservice in the long run.
  • It takes money out of your pocket.

So settle your bad debts as quickly as possible.

Let me complete my explanation with an example. You have received a loan to use in investing. You pay a 28% interest annually while you can get a 48% annual return on your investment. So this is good debt. You can have such debts as much as you can.

But if you have not been able to get a good interest on the loan you received or you have taken out a travel loan, this is a bad debt that you need to pay off quickly.

Here Are Some Other Examples:

I see people who are indebted to those around them and do not take any positive action to pay off these debts, until the number of these debts increases and causes trouble. It damages the reputation and personality of these people and questions their credibility.

I see people who have different debts in their business. Some of these debts are very small. Or some of these debts cause the credit of these people to be questioned, but they are still not willing enough to pay the debts and have no plans to settle these debts.

I see payers, although they receive salaries and benefits on time every month, they are still unable to pay their arrears. If they know they are adding more to their past debts than before, they still have no plans to settle with the debtors.

Why do you think some people do not pay their debts?

Why do some people not make an effort to end their debt despite having a decent income?

Conclusion

We have two types of debt. Good debt and bad debt. What most people do not know and often find themselves in a bad debt hole is that they do not know the difference between good and bad debt.

Good debts are the ones that make you money. Some debts are actually a kind of investment in a sector so that you can pay off your debt from the profit of that investment.

But bad debts are the ones that take money out of your pocket and make your pockets more and emptier. For example, debts to buy a car or clothes or electronics or a house, etc.… So the issue is not about debt. It’s a matter of knowledge between good debt and bad debt.

Do you know of any other situation that separates good debt from bad debt? Share them with us.

“If you have any feedback about what is bad and good debt that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

 

Banks

What Is A Bank Statement And How To Read It?

A bank statement is a collection of your important banking information and is a document that is issued to the account holder every month. In this invoice, one month of your account is specified and you need to check it every month. Many people do not pay attention to this important issue and only check it when they have a problem. You can control costs by checking your bill monthly.

What Does The Financial Statement Show?

  • Account number
  • Your transaction history and the impact of transactions on your account
  • A detailed list of deposits
  • Financial transactions and withdrawals
  • Accrued interest and credits received
  • Account balance
  • Start and end of the course

You Can Understand Many Of These Issues By Looking At A Bank Statement:

  • Know your financial habits and change them if necessary
  • Find your bank account problems
  • This bill can prove your eligibility for a loan
  • A financial statement is required to file for divorce and other problems that require proof of income
  • Using it, you can create an accurate budget for yourself
  • You can use it to check your financial records and find out about mistakes and scams.

Differences Between Online And Paper Bank Bills:

In the past, bank statements were sent on paper by post. This way, your bills could be lost and you could not access the old bills. But today most banks provide these bills online to bank account holders.

This way you can see your bill without any problems and wherever you have access to the internet.

Save on paper by using online invoices. Also, your information is stored in the banking system for several years. These invoices are safer and protect your personal information.

Bank statements are usually submitted online by banks. Also, many of them print invoices on a piece of paper and provide them to you for free, and some charge a fee for the print. A property bill is not necessarily a financial transaction from the beginning to the end of the month.

Your bank account may cover one month to the third of the following month from the 4th day. Most banks keep this statement for at least 5 months so that you can access older accounts if necessary.

This post contains affiliate links. Please please read my Disclaimer for more information.

How Is A Bank Statement Read?

If you do not have information about reading the bill, it may seem difficult to read at first, but by reading the guide below, you can easily read it. Understanding how to read your bank statement correctly can help you better manage your finances and avoid mistakes such as overdrafts and extra costs. You should check your bank statement every month because only then can you be aware of your spending records with the bank.

First, we will introduce the main sections of the bank statement and then we will review the other sections:

  • Personal Information:

In this part of your bill the full name and permanent address and usually the information that you gave when setting up the account. If your account has changed after opening an account, let your bank know so they can apply the changes.

  • Account Information:

This section contains information such as account type, your account number as well as the billing period.

  • Billing Summary:

In this part of the bank statement, the following information is shown briefly:

  • Account balance at the end of the period
  • Total impressions
  • Total deposits
  • Service fee
  • Remaining at the end of the course
  • Account balance at the beginning of the period
  • Transaction Summary:

In this section, you will find details of all your expenses by date. The oldest payments are usually at the top and the newest ones are at the bottom.

Description: Where / with whom the transaction was made

Date: Date of transaction

Withdrawal: Indicates that money has been withdrawn or spent

Deposit: Indicates whether money has been credited

  • Starting balance:

This section shows the amount you had in your account at the beginning of the period. That is, it shows your total balance without any deposit or withdrawal.

  • Ending balance:

The ending balance is the amount that is in your account after the end of your monthly billing period. If you save more than you spend, the ending balance will be more than the starting balance.

  • Deposits:

This section shows the installments of personal funds to your account. Deposits include direct deposits from your employer, cash checks, money transfers, and the money you transfer from PayPal or Venmo, and other credits.

  • Withdrawals:

In this section you can see the number of withdrawals you have from your account; both online transfers and cash card transactions

  • Interest:

Some banks pay interest on their accounts. The bank statement also shows the interest rate on your account. If you have several savings accounts, the interest of each one will be displayed separately as well as the total interest in this section.

  • Fees:

In this part of the bank statement, the expenses paid are displayed accurately. These costs can include overdrafts, return checks, ATM withdrawals, and monthly maintenance fees. Also, if you have used your credit card when traveling abroad, the cost of foreign transactions can be seen in this section.

  • Daily balance detail:

This section shows your account details every day. This section can be useful for reviewing financial habits.

  • Overdraft protection:

Your bank account can show it if you have an overdraft from your account.

  • Statement period:

This section displays the transaction history.

Conclusion

Banks issue bank statements to maintain and use their records. A bank statement is an overview of your financial activities and is a document provided by the bank to account holders. You can get this invoice on paper or online. With this invoice, you can access deposits, transfers, and withdrawals.

Bank statements are not complicated, but they do contain a lot of information that can help you. Although the accounts of different banks may be different, most of them contain the following information:

  • Starting balance
  • Ending balance
  • Deposits
  • Withdrawals
  • Interest
  • Fees
  • Daily balance detail
  • Overdraft protection
  • Statement period

In this article, we talked about bank statements and the information contained in them. We hope you find this article useful.

“If you have any feedback about what is a bank statement and how to it that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Debt releifs

Does Debt Reliefs Affect Your Credit?- We’ll Find Out

 

Your credit score reflects your financial life. In the United States, there are several reputable credit bureaus that prepare credit reports for individuals. Usually every adult in the United States has a credit score (FICO). These FICO credit scores range from 300 to 850. Of course, the score of 850 is excellent, and most people have a score between these two numbers. Scores below 620 are usually considered poor. Although 620 is not a clear standard, scores above 600 are generally considered acceptable. Scores above 750 are considered very well.

What Usually Happens When You Apply For A Loan?

When applying for a mortgage, car loan or credit card, the lender will receive your credit score from one of the principal credit bureaus and agree to your loan. Because your credit history is slightly different at each office, your credit score will vary depending on what your lender uses. Of course, if there is no major information about your records in these offices, your credit scores do not seem to make a significant difference. However, credit scores will fluctuate in the long run. There are many financial actions and practices that have a positive or negative impact on consumer credit. If you are planning to increase your credit score, you need to know how each of these measures will affect your financial reputation.

This post contains affiliate links. Please please read my Disclaimer for more information.

Like many others, you are likely to run out of debt. These debts are usually accompanied by high interest rates. In such a situation, if you use debts such as credit cards and personal credit improperly, it can make your situation much worse. As your debt increases and you think about what serious steps you can take to prevent your financial home from collapsing, you need to know how each of your debt settlement options will affect your credit score in the long run.

What Should Be Done In This Situation?

In this situation, if you can not pay off your debts and save yourself by considering a basic aggressive payment plan, getting a debt settlement loan or with the help of credit counseling services, there are two ways. Debt settlement: Debt settlement or bankruptcy. Both methods greatly affect and reduce your credit score. Unfortunately, this credit scores reduction, even if temporary, will have a negative impact on your new financial start.

Bankruptcy filing is also an effective way to clear debt. When you file for bankruptcy, a large portion of your assets are transferred to a trustee by the court to be distributed among your creditors. Because your creditors may even have the right to seize and sell assets secured by their loans, you cannot escape bankruptcy with assets such as a car or a house.

Such bankruptcies will remain in your credit reports for seven to 10 years, so avoid bankruptcy as much as possible unless you are in dire financial straits and there is no way out. If you file for bankruptcy, your credit score will be severely damaged. How much your credit score drops depends on what you did before you went bankrupt. However, the higher your credit scores, the lower your bankruptcy status. Your credit score is a measure of the likelihood of your poor financial decisions. Therefore, declaring bankruptcy will have a much greater impact on your score than debt settlement.

If we take your pre-bankruptcy credit score to 800, your score will probably drop to 250 points. If your credit score is around 600, we may only see a 150 point drop. Of course, the end result will be the same in both cases. In any case, even getting affordable loans, low interest credit cards and credit lines will be very difficult and unexpected.

Debt Settlement Can Be Better For Your Credit

There are several reasons why debt settlement can be better for your credit. Many financial experts believe that debt settlement is much better than bankruptcy. The main reasons for this are the slightest impact on the borrower’s credit score. When you sign up for a debt settlement program, as when you file for bankruptcy, your credit score drops. The governing constitution is the same for both, but scores higher than lower grades are reduced than lower credit scores.

Overall, the good part is that the debt settlement program will reduce your credit score by about half your bankruptcy score. Because your credit score is usually lower after settlement, it will be easier to repay your credit after debt settlement than after bankruptcy. Because your credit score is not greatly affected, you will find it easier to increase the credit you need to rebuild your financial life.

Why You Should Choose Debt Settlement Instead Of Bankruptcy

There are many reasons why you should choose debt settlement instead of bankruptcy. Although bankruptcy immediately becomes a public record for you, debt settlement is much more justified and shows that you have tried as hard as you can to repay your debts. The debt settlement process will take about two to four years, during which time you may be able to pay off thousands of dollars of outstanding debt. But the negative effects of bankruptcy last for years, for example during this time you may not be able to get a car loan, credit card or bank account.

Conclusion

At the end, significant differences between bankruptcy and debt settlement are some of the things that can help your credit score recover. Once you have selected the debt settlement, the most important thing you need to do is pay it regularly. Regular payments will have the greatest impact on your credit score. In fact, paying on time will affect 35% of how your credit score is calculated. But if you do not make your payments on time, you will never be able to rebuild your credit as much as you would like.

You need to make your payments on time and in full, and it will take time for your credit score to rise. You also have to pay for your new balances on time. If you do this, credit bureaus will increase your credit score. On the other hand, if you do not use credit cards, your credit score may be damaged. You can also open a small credit account and use it; you must pay the balance on time every month.

“If you have any feedback about does debt reliefs affect your credit that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

 

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Debt consolidation

Does Debt Consolidation Loan Affect Credit Score?

Everyone who owes money wants to get rid of it faster. Living with debt is very difficult and stressful. It also makes financial security and retirement planning difficult. While some believe that there is something called good debt and bad debt, but any debt can be heavy. For example, a student loan increases a student’s financial strength, but it is long and difficult to repay.

Borrowing a home loan can help a person make a good investment, but it can be difficult to repay for 30 years. So, while getting into debt can help us achieve our goals, it can make life difficult for us. There are several ways to get out of debt. The most basic way to get out of debt is to do two things: reduce your expenses or increase your income. There is a simpler and more popular way to reduce the amount of money spent on debt by merging debt into a loan that has better terms than what a consumer currently has on credit cards.

This post contains affiliate links. Please please read my Disclaimer for more information.

What Is A Debt Consolidation Loan?

In simple terms, debt consolidation loan means merging all your existing loans into one loan with lower interest rates and easier payment. The advantage of a debt settlement loan is that consumers pay from one monthly payment to different creditors to one creditor each month. This can significantly reduce your stress and make the repayment process easier.

You can make consolidated loans in different ways, depending on your circumstances, the amount of debt and your credit score. Debt consolidation loans are especially useful when our debt is not too high. Consumers usually receive better interest rates on personal loans than credit card rates. In general, these loans facilitate quick repayment with favorable interest rates but short payment terms. Therefore, monthly payments may be slightly higher, but the debt will be eliminated in a shorter period of time with less interest paid by the consumer.

Is it Better To Consolidate Our Debt?

Debt consolidation, if done in the right way, can be very helpful in getting us out of the heavy debt burden. The most important thing that every consumer should pay attention to is that accepting any new debt is not the right thing to do. If we are going to borrow to pay off our debt and repay our debt, it is better not to do anything at all. If you are planning to merge your debt into one debt consolidation loan, you need to be aware of its advantages and disadvantages.

Benefits Of Debt Consolidation

If you are planning a debt consolidation loan, here we have decided to enumerate its benefits:

• Pay only one loan

The biggest advantage of a debt settlement loan is that you only make one payment to the debt lender from the various creditors. Some people think that this will put a heavy burden on them, but it will help you find a way to get rid of your debt as soon as possible. In addition, having only one payment helps you to avoid missed payments, which can greatly affect your credit score. Most of the time, this simplification of the payment process can help you to have more control over your financial future and be on a healthier financial path.

• Reduce payments

Most of the time, when you take out a debt consolidation loan, you have less cash each month. This will help you to avoid new debts and save money instead of negative expenses every month.

• Reducing interest rates:

One of the major benefits of a debt settlement loan is that it lowers the overall interest rate you pay on your debt. This is very valuable in the long run and will create a safe savings for you. Rest assured that debt consolidation is the right choice, given the complete picture of what you are currently paying each month in interest and principal and new payments on new loans. Although longer payment terms make you pay less, they are not always the best choice.

Disadvantages Of Debt Consolidation Loans

In addition to the benefits, consolidated loans also have certain disadvantages. If you are not regular in your monthly payments and do not change your bad habits, a debt settlement loan can create a critical situation for you. Therefore, if you are not cautious and diligent and do not have a plan, you will have to pay more interest during the life of the loan.

• Credit card account balance is running:

Debt consolidation loans can save you from the oppressive burden of long-term debt, but if you are not regular, you can put yourself in a more difficult position. You get valuable habits when you pay off your debt.

• Pay more interest in the long run:

Although debt consolidation loans can reduce monthly payments and create better conditions for those who are under heavy debt pressure, you should be aware that consolidated loans cause you to end up having to pay more interest. Customers who use equity in their homes are likely to seek to avoid significant costs and long-term loans. This means that you have to pay off your debt interest for up to 30 years.

• No change in spending habits:

Many consumers find that their debts and habits do not change significantly after merging their debts. It seems that any savings they make from debt consolidation are lost in their day-to-day expenses. If they do not try to change their habits, they will most likely drown in debt again.

How Does A Debt Settlement Affect My Credit?

Ways Debt Settlement Helps Your Credit Score:

  • You pay your consolidated loans on time every month. (Debt payment on time has the greatest impact on credit score)
  • If you eliminate your balances or reduce them to less than 30% of your credit limit on the card.
  • Having different types of credit will help your credit score.
  • Change your habits and commit not to incur more debt.

On the other hand, debt consolidation can damage your credit score:

  • Recharge your credit cards after paying your balance.
  • Delay the payment of debt consolidation loans and do not have a good payment history.
  • You apply for loans that you are not eligible for.

Conclusion

In this article, we got acquainted with the debt consolidation loan and its advantages and disadvantages, now it is time for you to evaluate the points you have learned with your conditions and make the best choice to solve your debts. However, resolving a large debt can be a difficult and stressful process. However, if you are willing to be honest with yourself about the cause of your debts and make some fundamental changes in your lifestyle and habits, you will find a way to get rid of your debts.

“If you have any feedback about does debt consolidation loan affect credit score that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

 

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Credit cards

Credit Card Debt Management Plan.

Nowadays, the ease of access to credit cards of banks and financial institutions has made their use very popular among the people. These cards have been very popular for receiving money, making in-person and out-of-person payments, and other facilities they provide.

In the world of bank cards, there are many different types of these cards. Two of the most important types of cards that can be mentioned are debit cards and credit cards. The main difference between the two cards is that when you buy from debit cards (debit cards) the money is paid from your accounts with the banks that have already deposited.

This post contains affiliate links. Please please read my Disclaimer for more information.

In fact, with this card, you will have access to the money you have in your accounts with various banks, the same bank cards that are used in Iran today. But when you use credit cards in your purchases, the purchase amount will be paid from the credit that the bank gives you, which is actually a kind of borrowing from the bank. So in the future, you will have to pay the amount of credit spent along with the interest.

The Use Of Credit Cards.

Credit cards can be used to make your daily purchases up to a limit previously agreed with the bank. The purchase amount will be added to your credit card account as debt, which you will have two ways to repay in the future; the first way is to pay off your debt on time. In this case, you will not pay any interest on your debt.

In a second way, it is possible to pay off the debt in small installments over time and on a monthly basis. In this case, in addition to the original money, you will have to pay an amount called interest (which is usually the highest in the United States at 29% per year). The shorter you pay off your debt, the lower your interest rate. The point is that these cards are unsupported, meaning that collateral is not required of banks to ensure repayment.

 

Debit Card Or Credit Card?

The question that arises in this regard is which card to use in daily purchases, debit cards, or credit cards? In general, it is recommended to use credit cards for purchases. Given that when using credit cards, you are using the money directly in your deposits with banks, you do not have the problems that you may face if you get into debt.

However, there are times when it is better to use credit cards. For example, in some hotels and car rental companies in the United States, people are required to use credit cards. Because if people use extra hotel services or their rental car is damaged, they can use credit card credit.

Looking at the history of credit cards, it can be seen that the issuers of this card initially offered only one card that had certain characteristics. But today, credit cards are classified into different types according to the interest rates that are applied to cardholders, the cost of receiving these cards, and the different rewards that they can bring to their holders.

Credit transfer cards: With these cards, the credit that must be paid can be transferred to other time periods.

Prize-winning cards: As the name implies, these cards offer some rewards for purchases made by customers with these cards.

Student Cards: These cards are issued for the use of students, who usually do not have a credit history.

Recharge Cards: These cards do not have credit restrictions at the time of purchase and the entire debt must be settled at the end of each month.

Backed-up cards: This type of card is offered to people who do not have a good credit history. In these cards, a backup deposit must be created for the card, and the purchase limit of the card is determined based on this deposit.

Where Do The Profits Of Credit Card Companies Come From?

Credit card companies are usually very profitable. These companies usually make their profit in several ways:

High-interest rates: The interest rate received from the credit card account is one of the main sources of huge profits that companies or banks issuing this type of card.

The annual fees charged for these cards.

Penalties for late payment, overpayment, and other penalties

Banks charge a fee for the transaction each time customers use their credit cards to make a purchase.

What Is A Debt Management Plan?

A debt management plan is a type of payment plan established and administered by a credit counseling agency. Many credit counseling agencies are non-profit organizations that offer education and assistance to help people better manage their finances.

When you work with a credit counseling agency, you will meet with a consultant who will review your financial situation and help you understand your options. If a DMP is suitable, the appraiser can negotiate with creditors on your behalf to create new payment plans.

As part of the negotiation, creditors can waive fees and lower the interest rate on your accounts if you agree to pay the debt through a DMP. With many DMPs, the goal is to fully pay off the debt within three to five years, which is easier when you accumulate less interest each month.

Once the DMP is initiated, you will make a single monthly payment to the advisory agency, which will then distribute the money to your creditors. The agency may also charge you a small monthly fee for the service, but your interest savings may more than cover the cost.

Typically, DMPs are only available on accounts that aren’t backed by collateral, such as credit cards. And while you may be able to choose which accounts you want to include in your DMP, you will need to close all credit cards that are part of the DMP.

Conclusion

If you think a DMP might be a good fit, find and meet with a qualified credit counselor in person, or work with a counselor over the phone or online if you prefer.

Many, but not all, credit counseling agencies are non-profit organizations, and you may want to limit your search to non-profit organizations. You can start by looking for agencies that are part of the National Foundation for Credit Counseling or Financial Counseling Association of America, two certification organizations, or that are accredited by the Council on Accreditation.

In preparation, you may want to review your credit report and list your current debts, information that you may need to prepare, and share with your counselor prior to your initial consultation.

You can start by checking the accounts listed on your Experian credit report online for free.

“If you have any feedback about credit card debt management plans that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

 

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Debt

Does Debt Consolidation Hurt Your Credit Score?

When you apply for any financial credit, whether credit or loan, you need to make sure that you have enough money to repay it and that you will be able to pay all the installments (bills) regularly.

Things to know before applying for a loan or credit card.

When applying for a loan or credit card, complete your information on topics such as:

What will be the interest rate?

When will the installments be due and when will the loan be repaid?

What will be your monthly installments?

Is there no charge for the loan fee or the annual cost of the credit card?

Will you be required to pay a penalty if the loan is settled earlier than agreed?

What will happen if you are unable to repay?

If you have a decision to take out a loan, it is advisable to thoroughly consider the offers of other financial institutions to find the best possible terms. Note, however, that only reputable financial institutions such as banks and credit unions are suitable for this purpose.

After receiving a loan or credit card, you must pay the installments specified in your contract with the financial institution monthly and in full. If your installments are not paid or are not paid on time or not paid in full, it can jeopardize your credit history.

This post contains affiliate links. Please please read my Disclaimer for more information.

The interest rate announced by credit card companies is often high, ranging from 18% to 21%. The company issuing your credit card will set a small amount as the minimum payable on the invoices submitted. If you only pay this set minimum each month, you will end up having to pay much more for the interest added over time.

It is recommended that you pay your credit card bill in full each month. If you are unable to do this, it may be because you are spending more than you can afford and it is best to stop using your credit card until it is fully settled.

For one reason or another, you may find yourself in a situation where you may not be able to manage your finances and pay your bills and your debt is increasing. This may be due to unforeseen expenses or sudden loss of income or incorrect prediction of financial ability to repay loans taken and credit card expenses.

Having financial pressures and having trouble managing your debts can be stressful for you and your family, and can affect your credit history. If you are having trouble paying off your debts, in this article we will introduce one of the debt relief methods which are the debt consolidation method.

If you have multiple high-interest accounts, monthly payments will be difficult and stressful for you. In such cases, if you use the debt consolidation method to pay your debts, your monthly payments will decrease and your credit score will increase. In this article, we look at how debt consolidation affects your credit score.

 

Why Use Debt Consolidation?

Debt consolidation can save you money. Debt consolidation with a new low-interest rate loan will help you organize your expenses. In this case, the savings will be done better and your worries about repayment will be easier.

This way you have an account that is easy to manage. When the number of accounts increases, the possibility of mistakes increases and you may forget some payments. Delays in payment time damage the credit score. So a debt consolidation method can help maintain and improve your credit score.

How Can Debt Consolidation Affect Your Credit?

To have good financial security and plan for retirement, you need to pay off your debts as soon as possible. Two conditions are necessary to get rid of debt:

  • Reduction in costs
  • Increase revenue

Debt consolidation is a cost-effective way to help you pay off your debts as quickly as possible. But how debt consolidation affects your credit score needs to be considered. Here are some things to look for when selecting yours:

  • Credit Inquiry:

Each time you apply for debt consolidation, the lender will review your credit report, which will lower your credit score. Also, if you apply for several loans, you will lose more points.

  • The average age of accounts:

Each time you open a new account, the average age of all your accounts decreases. If you have many accounts, opening a new account will not affect your credit score much.

The older you get your credit score and the better your payout history, the higher your credit score.

  • Credit usage rate:

When using debt consolidation, your credit usage may be affected. Using credits and cards will affect your scores.

This can increase your credit score if you have a high-interest rate credit card or use a consolidated loan for your debts.

  • Payment history:

If debt consolidation improves your ability to pay, it will affect and increase your credit score over time.

In addition to the above, there are other reasons why your credit score may fall short when debt consolidation:

  • New credit programs:

Your credit score may be damaged even before debt consolidation. When applying for a loan, the lender does some research on your credit, which lowers your credit score.

  • New credit account:

When you open a new credit account, your credit score is temporarily reduced. The lender considers the new credit risk and therefore your credit score will drop temporarily.

Despite the above, it can not be said that debt consolidation always reduces the credit score. Here are some positive points:

  • Use ratio less than credit:

When you open a new account for debt consolidation, the amount of credit you use may decrease as your credit increases. When you use less of your credit, this factor counteracts the negative factors that affect your account.

  • Good debt record:

If you make your payments on time, your credit score will gradually increase. This is the most important factor in improving your credit score so always try to pay on time.

Conclusion:

Debt consolidation can reduce your monthly payments and help increase your credit, but some risks can cause your credit score to drop temporarily. However, if you change your bad habits in paying off debts, it will have a positive effect on your credit score.

There are ways that debt consolidation can improve your credit score if:

  • You pay your debts on time every month.
  • Eliminate or reduce your account balances.
  • Create different accounts. Having multiple accounts can help increase your score.
  • By doing this, you will gradually change your bad habits and your debts will no longer accumulate.

Debt consolidation can hurt your credit score if:

  • Delay the payment of your loans.
  • Recharge your credit cards again after paying off your debts.
  • You apply for loans for which you are not eligible. In this case, your credit score will be reduced for a short time.
  • “If you have any feedback about does debt consolidation hurt your credit score that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Student loan

Best Way To Pay Off Student Loans Fast!

Student loans are one of the facilities provided by the Student Welfare Fund to meet the needs of students. Student loans have different types and conditions that students apply for these facilities according to their needs and conditions.

Students who use student loans are required to repay the loans to the Student Welfare Fund upon completion of their studies.

You may also be faced with a huge amount of different debts, but a way must be found to get rid of this situation. Repaying large amounts of debt and loans is certainly a very difficult task and may affect various aspects of life, but it is not impossible to do so. You need to choose the right path to make the debt payment process easier. In this article, we will talk about the best way to pay off student loans fast, so stay tuned until the end of this guide.

Pay Off Your Loans To Live A Happier Life.

Paying off debt is painful. At the time of repaying the student loan, you have already spent this money on university tuition, starting a business, etc. So when you repay, you feel like you are losing your money and getting nothing in return. Not surprisingly that we procrastinate our loans every month.

Any loan that pays off faster is like progress. Paying off debts quickly reduces your anxiety and frustration. If you reduce your debts, you no longer have to worry about increasing your monthly expenses and you can save or invest more money. In fact, it will significantly reduce your financial stress.

This post contains affiliate links. Please please read my Disclaimer for more information.

What Do You Spend The Most Money On?

Before you get a student loan, you need to know how much money you can spend each month. To calculate this amount, you need to budget the costs and money left over after spending the necessary monthly expenses. Do not be afraid to do this, even if you do not have any special knowledge or experience, budgeting will be easy.

The most important principle of budgeting:

Remaining money = cost – income

But why is budgeting important? In fact, doing so will show you how you spend your money. As you write down your expenses, you will probably find that your expenses are many times what you have in mind right now, as well as discovering your unnecessary daily expenses.

 

The Best Way To Pay Off A Loan.

The repayment of student loans depends on several factors and will vary depending on the type and amount of the loan and the circumstances of each student. What is the same in this process for all graduate students is the start of loan repayment, which is paid in installments upon completion of the course, and all students are required to pay them.

Whenever possible you should have all of these components in place for launch to maximize profits. The longer it takes to repay the loan principal, the higher the interest rate. Therefore, to pay the minimum possible interest, you should spend the maximum amount you can each month to repay the debts. To repay your student loans faster and in a shorter time, you need to observe the following points:

Pay more each month:

If you add a certain amount to your monthly installment every month, the total repayment will be reduced and it will be done in a shorter time. Let me clarify this with an example. Suppose you take out a $1,000 student loan. You are required to pay $100 per month. If you pay more instead of $100 (for example, $120) your installments will be less and the final repayment will be faster.

Get help from a part-time job:

Going to university and graduating is one of the biggest dreams of every person. Finding a suitable job after graduation is also the biggest problem that every young person faces. Nowadays, the number of university graduates has increased a lot and there is more competition between them, and even many of your competitors are taking courses to increase their skills and experience to maintain their superiority among the competitors.

But do not worry; you can get a good job by doing more work and effort. If you do not find a job that suits your education, you can start with a part-time job right now. This will both increase your savings and help you pay off your student loans.

The Key To Repaying A Student Loan Is To Stay Motivated.

Depending on the circumstances, you may owe several years. Knowing repayment methods is not helpful if you are not serious enough about paying your installments. You may be eager to repay your debts right now, but will you feel the same way next month? How about during a year?

The key to getting out of debt is to stay motivated to repay from start to finish. Start with a few goals. Of course, the main goal is to “get out of debt”, but choosing a few short-term goals is necessary to achieve the long-term goal. Before doing so, it is important to choose the right goals.

If you want to save money, get out of debt, live within your means, and attain mutual long-term goals, it’s important to discuss with your financial adviser about your approach to money management and find some common ground. Otherwise, your frugal efforts may be voided by your poor financial management and spending habits.

Invest your extra income:

Most people spend the extra money left over from the necessities of life immediately on shopping and other work. If you want to spend all your money, this is your right but why not use this extra money to make more money? Investing can be an unfamiliar and scary subject for you, but this is not difficult at all. Several options are depended on how risky you are. Some jobs have high risk and high returns, while others are more stable and reliable. With the profit from the investment, you can pay the student installments.

Conclusion:

No matter how much you owe, there is always a truth: Debts are not enjoyable and do not pay easily. You have to face this fact now; otherwise, you will have to pay more over time. Delays in paying student loans can double that.

Try to live up to your standards. It will not be easy to do this and you may feel that you deserve a better condition but the most important thing is to get out of debt as soon as possible. When you get out of that situation, your quality of life will go beyond the ideal.

If you are facing a lot of student loans, it is time to face this fact and take your debt repayment seriously and try to get out of this situation. Getting rid of debt is a must if you want to get rich.

“If you have any feedback about best way to pay off student loans fast, that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

 

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Financial planning

How To Get Out Of Debt With A Low Income.

If you ever thought that getting out of debt with a low income was difficult, wait until you try to get out of debt with a low income during this period of the COVID-19 pandemic!

We all know that the COVID-19 pandemic has triggered an unprecedented wave of business closures, placing millions of Americans out of work. It has also exposed a deeper, more structural problem with the United States economy that has been looming just beneath the surface for some time. In the following paragraphs, we will learn more about how to get out of debt with a low income during this difficult period.

Understanding Debt And How To Live Without Debt.

It’s often believed that debt can be used as leverage and that it can get you where you want to go faster than living a debt-free life. That can be true, but living with debt can also get you bankrupt faster than living a debt-free life. Debt has become a way of life in the United States.
Many Americans are now living from paycheck to paycheck as result, a lot of people are also in debt and some are still borrowing more money. Ironically, we live in one of the wealthiest countries in the world, but we always have money problems. We can work hard all our lives but retire poor. We do so much to raise our kids just to see them finish college with a lot of debt.

Debt becomes a way of life. We don’t have much, and we don’t know much. Nobody teaches us how to manage our money in school. Financial issues are not often discussed, and financial products are not always explained. Most people have trouble balancing their checkbooks and reading a financial statement. We use credit cards every day and don’t always understand all the hidden charges. We may be active spenders but passive savers. In my videos, I want to share with you about personal finance as to how a friend would talk to another friend.

This post contains affiliate links. Please please read my Disclaimer for more information.

Debt Management is one of the four pillars of building a solid financial foundation or living a life of financial freedom. We can not live a life of financial freedom if we owe a lot of debt. Most interest rates on our debts are higher than the interest rates on our saving or investment accounts. That’s why it’s advisable to pay off your first before saving and investing.

Don’t Get More Debt when you have a low income.

I know a lot of people might be wondering is it possible, yes it is very possible to live without debt. You can pay it all off and stop borrowing money. Some people get more debt when they have a low income because they spend more money on things they don’t need with money they don’t have.

What Is The True Cost Of Debt?

You’re paying lots of interest to someone else.
This money is not working for you. Here’s is why you need to know the cost of debt;

Rule of 72.

How to use the Rule of 72? Divide 72 by the interest rate of your loan or credit card. The result is the number of years it takes for the debt or investment to double. Let’s take a look at the following interest rates; 18%, 20%, and 24%.

72/18 = 4                              72/20 = 3.6                                 72/24 = 3

Assuming that you have a $10,000 credit card debt, let’s see how long will it take before the borrowed amount doubles!

At 18% interest rate, it will take 4 years for your borrowed amount to double to $20,000.
At 20% interest rate, it will take 31/2 years for your borrowed amount to double to $20,000.
At 24% interest rate, it will take 3 years for your borrowed amount to double to $20,000. This is why it’s good to pay your debt as fast as possible to avoid the double effect.

This is why it’s good to pay your debt as fast as possible to avoid the double effect. Here are the simple ways to manage your debt;

1. Don’t Get More Debt – If you borrow more money, the interest will skyrocket over time which you will not be able to pay.

Always buy used items from thrift stores and classifieds when you need to buy anything, including clothes, furniture, vehicles, and even appliances.

2. Live Below Your Means – Spend less and only buy things with your own money instead of credit.

Make a grocery shopping list as per your budget. Let’s assume you have allocated a certain amount for grocery shopping, then you shouldn’t spend more than this amount. You can buy groceries online to get all the items on your list at a huge discount. This will help you save on grocery shopping. Always use cash, debit cards, and prepared credit cards when shopping for groceries because you don’t have to pay interest rates. You are using your own money.

3. Reduce Your Credit Cards Usage – Many middle-class Americans turn to use their credit cards as a plastic money savior to help purchase necessary items when they have a lot of debt and low income.

4. Make a Budget – Budgeting helps you manage your spending and also helps manage your debt. Use coupons for grocery shopping and for dining out. Reduce gas and parking costs. Save by carpooling, walking, biking, or taking public transport. Avoid ATM fees, checking and saving accounts fees, overdraft charges bounced checks, money orders, the list goes on.

5. Cancel Any Unnecessary Subscriptions – Recurring payments can add up, even if you don’t have any unnecessary expenses. During COVID-19, my family canceled our gym membership because we not going to the gym, so we find alternative ways of exercising like using home gym pieces of equipment.     

Use Debt Snowball Method.

With the debt snowball method, you always put your extra money toward the debt with the smallest balance.

Here’s an example – Assuming that you have a credit card with a $1,000 balance, another with a $3,000 balance, and a third with a $7,500 balance. You make the minimum payments on each card, and any money left over would go toward the card with the $1,000 balance. Once you pay off that card with $1,000 you would put your extra money toward the card with the $3,000 balance.

Mathematically, the debt snowball method isn’t optimal. You would also save more money on interest rates by prioritizing debts with the highest interest rates on credit cards or loans.
Using this method is extremely popular because it works from a psychological perspective. When you prioritize your smallest debt, you get one of your debts eliminated as quickly as possible. That gives you the motivation that you can take care of the rest and be on your way to live a debt-free life.

Take Control Of Your Cash Flow.

Get educated about all aspects of personal finance to take control of your cash flow and reduce or eliminate your debt with a low income. You also have to make money when you can, while you can. If you have multiple sources of income, paying your debt with a low income during this period of the COVID-19 pandemic won’t be a problem.

We spend so many years in school learning how to make a living, but we should also invest our time learning the financial basics to save a fortune for our family and our future! If you don’t re-evaluate your spending habits and determine where your money is going, you will never be able to pay off your debt with a low income during this pandemic.

“If you have any feedback about how to get out of debt with low income that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.