According to a report in 2019, New York was among the top ten states with high student debt with an average of $31,253. This shows how serious is debt issue in New York. It is not only New York but the whole of the United States. According to another report, the average revolving credit card debt in the same year in the United States was $6,271. Every person needs ways to manage their debt. There are many companies that can solve your debt problem like debt consolidation in New York. In the following article, we have listed few ways to manage your debts.
How To Manage Multiple Debts
List your debt
Ignoring your debt is the most comfortable thing. It is human nature to ignore whatever does not make us feel good. However, ignoring your debt would not make creditors disappear. On the other hand, writing your total amount of debt, name of creditors, monthly installment amount, due installments, and due date will give you a clear picture of your debt.
Therefore, listing your debt and looking at it periodically will make you more aware of your debt. Also updating it will keep you informed about your increasing or decreasing debt.
Bad debt vs Good debt
Once you have prepared your list of debts, you should differentiate between good debt and bad debt. What is a good debt? Good debt or bad debt can be classified based on types of interest. For example, a simple interest of 10% is much better than a compound interest of 5%. Debt that has a simple interest can be put in good debt while debts with compound interest should go into bad debt.
For example, a student loan or mortgage where you need to pay fixed installments over a period of time is good debt while a credit card debt that is revolving debt is bad debt. Also, if you can manage to get more interest from investing in a debt than the interest that you over it, then it is good debt.
Set priorities in debts
While it is true that you will eventually have to pay all your debts but there are some more important debts and some less important. For example, you should pay your nearest due date installment first and not the one that has time. Also, try to pay big installments regularly because once defaulted, it is not easy to catch up with big payments while you can catch up with small ones.
Similarly, try to pay debt with higher interest first. For example, if your credit card debt has the highest interest rate then prioritize that first. Once, you prioritize your debts, managing your debt becomes much easier.
Plan your expenses
Planning your expenses helps you in saving money which consequently helps you in paying off your debt earlier. Without a good budget, it is easier to spend money on unnecessary things. A budget prioritizes compulsory and necessary expenses and eliminates unnecessary expenses that you can live without. You ever have doubt about something to buy or not, try to live without it. If you can manage then you do not need it.
Planning a budget also makes you aware of the money that you can save. Once you plan a budget, you will be amazed to know how much money you spent on unnecessary things.
Do not hesitate in asking for help
So, you are neck-deep in debts. You are paying all your installments on time and still, the debt keeps increasing. It is not hard to get trapped in the web of debt. Anyone can fall into this but what is more important is how do you react to it. If your debt is not getting any lesser despite all your efforts then it is time to ask for help. Do not hesitate to ask for it because of the stigma or humiliation among your relatives. There are many options available in the market to get out of debt. Some are the following –
1. Debt settlement –
Debt settlement is an option to clear off your debt by negotiating with your lender. You can get rid of your debt by paying less than what you originally owe. There are many debt settlement companies in New York City that can help you if you choose this option.
2. Debt consolidation –
Debt consolidation is another solution of your debt in which all your existing loans consolidate into one new loan with a lower interest than what you were paying earlier.
Bankruptcy is best suitable for businesses that have sunken and can not pay their debt. It is preferred when the amount of liabilities exceed the assets.
However, before going for any of the above options, you should either hire a professional company that provides such solutions or you should take advice from an expert in the field.
Managing your debt is the first step in the direction of clearing your debt. You can manage your multiple debts by using above mentioned simple tips like making a list of your debt, setting priorities in debt payment, and limiting your expenses through a budget. Also, do not hesitate to ask for help. Delaying asking for help will only make your debt trap worse. There are many financial institutions that provide solutions to debt like debt consolidation in New York. There are many debt settlement companies in New York City that can help you to get rid of your debt in lesser time. All you need to do is analyze if you need help with your debt or you will be able to clear it off by yourself.