The problem of debt is to overcome the capacity of indebtedness, that is, to ask for more than what could be solved. To avoid paying more interest than what was borrowed, Tanya Watchsea, a writer specializing in personal finance and founder of blogylana.com, shares an effective three-step strategy to settle debts.
Organize debts, know the capital
The idea of organizing debts is to know the total amount owed, the interests of each, the level of importance they have, but above all determine which is the least amount.
Additionally, it is important to know what the net income is, discounting the daily expenses, in order to determine what is the actual monthly amount to be used to pay the debts.
Start paying the smallest debt
Once the debts are organized, with a little effort the smallest one is liquidated, so that the money that is free after paying it goes to the second one, and thus until managing to finish with all the debts reducing the levels of interest.
Generally it is thought that the ideal is to end the debt of greater interest, but in reality it is necessary to go little by little to have small profits on the way, since eliminating the smallest is a great advance.
Do not acquire a debt to pay another
Sometimes delays and high interest pressure to apply for a loan and solve a debt, or what many banks do is invite you to move the balances of other accounts in one. It is important to read the contracts well and know what is most convenient, since it is not always a good practice.
In this sense, the general recommendation is not to dig a hole to cover another hole. We must understand that credit only serves to grow when it is financially stable; Credit is not a bridge to get from one payment to another and is not an opportunity to plug financial holes. A credit is rather a lever.