Friday, 16 July 2021

Strategies for Getting out of Debts

Hello my Lovelies, how you all doing? Hope you all are keeping safe and adhering to all laid down precautionary measures placed by our various health ministries.

So today's topic is one that many of us might have encounted at one point in our lives and might have also found it very difficult to meet up with the repayment hence i know you all will relate with the post.

Like the popular saying that goes, collecting of loans is very sweet but repayment is not so palatable and that's where most people have issues with but today we will be talking about the strategies that would help in getting you out of the debtors list.

 I was having a conversation with a friend few days ago and he said something very important about loans and i quote " loans can quickly turn into bad debts and that is as a result of the borrower defaulting in making the scheduled repayments as at when due and such loans are then termed nonperforming debts and that to avoid such, just ensure to make repayments at when due.

So today's class will be quite insightful and explained in simple terms so we all can learn something out of it and with that we will start with the basic which is what really is Debt and in what few forms do they come in?


Debt is usually an amount of money that is owed to an individual,bank or company with the intention of paying back over an agreed period of time and such loans can come in various forms and some of the popular form is the personal debt which is one which you are personally and legally responsible for and that can be categorized into three:

1. The Secured debt: which simply means that the debt is backed up by a collateral so as to reduce the risk of lending so that in the event that the borrower defaults in paying back his loan, the collateral is seized ,sold and then used to repay the loan.

2. Unsecured Debt: This is not backed by any collateral but based on the individuals credit worthiness but when the borrower defaults even though there might be no collateral to seize, you are at the risk of having your worthiness smeared hence closing the doors to getting more loans.

3. Revolving Debt: is any debt without a set loan amount for a specific amount of time. It can also be said to be an agreement made between a lender and consumer that enables the borrower to borrow an amount up to a maximum limit on a recurring basis.

Many examples of debts include but are not limited to the following such as car debt, mortgage debts etc. Debt is a recognized major problem within the United States as of 2011—most people have at least one credit card, and the debt problem only worsens in periods of economic recession and also According to the 2019 Consumer Debt Study from Experian, the average American had $90,460 in debt in 2018. This number includes mortgages, credit card balances, auto loans, personal loans and student loans

We all understand how the situation of the economy is hence collecting of loans is not new but there are very good strategies we can use to get out of bone in the neck types of debt and it's listed below:

1. keep your repayment plan in a place where you can easily see it so as to give you the motivation to pay off on time.

2. Try and pay more than the minimum payment which will help you get out of the debt faster.

3. commit windfalls to your debt which simply means, if you come in to some tax return or stimulus check or any even monetary gift, instead of saving it, you can either decide to share it 50/50 or push all into your debt repayment and with that you will find out that you are almost done with your debt.

4. Tracking your spending is of utmost importance and that way you will less likely be drawn into the pit of debt.

5. Create a budget and have the self control to follow it diligently.

6. You can actually negotiate with your creditors for lower interest rate which will help your pay of the principal in no time.

7. If you have items you no longer need lying around, sell them off on sites like ebay, craiglist and so on and make some bucks so as to push into your repayment

8. Work extra hard to make more money which will enable you pay up faster.

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