How to get out of Debts Further editorial at nasfonline.org
The hostile economic context in which we live is characterized by inflation and unemployment. Yes, getting out of debt now is a bit more complicated. The indicators of people and companies in default have been increasing . The difficult task of doing a financial planning in the future and the fact that there are no entities that offer loans at a fixed rate, forces people to take on more debts than they can afford.
This is how people have increased their payment commitments, having more expenses than income, which for various reasons they have contracted. Now, when it comes to the point that the money that has been earned is already due, then in most of the times the wrong decisions are made. This forces us to resort to the different options that may exist, but choosing the one that, instead of minimizing the debts, increases them. Getting out of debt does not happen in a day, but it is definitely possible.
Actions to consider to get out of debt
There are several methods that can be implemented to get out of debt , either by paying the lesser amount up to the higher one. Or on the contrary, starting with the payment of the one with the highest interest rate. Regardless of this, the first thing to do is define the parameters to be met. It is necessary to design the strategies to follow and initiate the steps that will allow the elimination of debts. These debts truncate the financial stability of people. To do this, firm and smart decisions must be made in the short, medium and long term.
A design in the strategies to implement allows identifying every detail to get out of debt. Among these are loans and credits acquired, as well as fixed expenses. Likewise, a list must be made with fixed income, in the short and medium term. The main reason is that they allow to define exactly the assets and liabilities of a person.
Once this information has been obtained, it is important to prioritize the debts, considering who is owed, how much, the terms in which you can pay and the interest rates to pay, being able to use as a first strategy to reduce expenses, eliminate unnecessary or increase income.
Paying the Debts
When the first debt has been paid, it must be removed from the list. This does not mean that new payment commitments can be acquired since, instead of leaving debts , they would be increasing. In these cases, what must be done is to pay the next one on the list, being able to do it in a shorter term. This would minimize the risks of a negative credit history.
We can not leave aside the entrepreneurs who understand that financing is key in every company to develop. Keep that development constant and grow over time. However, in the absence of money they are forced to incur debts. If these debts accumulate, they create a significant financial problem that can lead to bankruptcy. That is why it is also necessary to be prepared to face this type of situation and get out of debt on time.
Negative Effects in the Credit History
The main reason is to avoid negative effects on the credit history of a person or company. It is important to indicate some recommendations that must be considered to get out of debt . In this sense, debts must be controlled by creating a monthly budget. This constantly monitoring the basic expenses so as not to incur the unnecessary ones.
When you have several outstanding debts, it is recommended as a first option to prioritize the payment of debts with high interest. This helps us avoid default, especially when it corresponds to vehicle or mortgage loans. This is because of their high quotas, which can generate a problem in the short and long term. This may cause legal action to be taken against you.
In conclusion, poorly contracted debt can destabilize the personal, family and even business economy. And this is the importance of encouraging financial education for people, workers and families. A simple design for the development of a revenue recording system, planning of expenses, construction of balances and possibilities of saving, investment, indebtedness or expense, will not only help to get out of debt , but also will allow to avoid errors that entail a over-indebtedness