It could be your mortgage, your credit card or a personal loan. Whatever your debts are, as they accumulate it can feel like they’re difficult to manage. But don’t lose confidence. While there’s no overnight ‘quick fix’ for debt problems, there are steps you can take to go from debt stress to debt success.
Create a debt ‘hit list’
Start by listing all your debts, including the fees and the interest rate which applies to each one. This will help to give you a holistic view of your debts. Chances are the interest rate on your credit card will be at the higher end of the scale, but it can vary depending on the type of purchase you made on the card.
Analyse your spending and create a budget
A detailed look at your outgoings over a set period could help you identify your current spending habits, and distinguish between essential and non-essential spending. Consider whether you can redirect any non-essential expenses to make extra debt repayments, and then draw up a household budget to make it easier for you to stick to your plan. Take a look at some of our hacks to get your household spending under control.
What’s more – your credit card could have features to help you to stay on top of your spending in the future. ING’s Orange One has a feature that gives you notifications when you’re close to your card limit or a limit that you specify. This is super handy when life gets a bit frantic.
Pay off high rate debts first
Once you have identified how much cash you can put towards making extra repayments, work out which debt to eliminate first. Due to the power of compound interest, it could make sense to allocate any additional repayments to the debt with the highest interest rate. In the meantime, keep making the minimum repayments on all your remaining debts.
For instance, ING’s Orange One has a lower rate for installment payments, so these might be lower on your hit list than other credit card repayments. It’s also worth keeping in mind that the Orange One doesn’t have a higher interest rate for cash advances when compared to purchases, unlike other cards. Check with your card provider so you have all the facts.
Once you’ve paid off one of your debts, put the money you’ve been using to pay off this debt towards extra payments on debt number two on your hit list, and so forth.
If you have equity in your home, and a number of short term debts you wish to clear quickly, you may be able to refinance your home loan and use some of the equity to pay off the short term debt. Speak to your broker of financial adviser for advice specific to your situation.
Ask for help if you need it
If you are in serious debt and struggling to meet regular minimum repayments, it may feel particularly overwhelming. Rather than ignoring the problem or missing a repayment, speak honestly to your lender about your situation so they are aware and can help you take back control of your finances.
Credit card debt is one of the most common causes of debt stress, but there’s no reason to lose confidence. Exploring your card options can help you find one that suits your lifestyle better. To find out about the benefits of ING’s Orange One and how you can apply, visit here.
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