A new year begins and with it new bills appear. Many Brazilians are already starting the year with debts and need help to get out of the red. If this is your case, find out how get out of debt in 2022 and stay in blue.
Keep reading to learn how to take care of your financial life.
What this article covers:
How to get out of debt quickly?
To end the bad debt cycle once and for all, you need to learn to better balance your expenses based on how much you earn monthly and how much debt you have.
With that in hand, draw up a financial plan and outline payment priorities. Experts indicate the formulation of a list or table to enter all financial commitments and have a broader view of how you can deal with your monthly costs, defining a strategy for paying off old debts.
Keep in mind that the main tip on how to get out of debt is to get rid of debts that have higher interest rates, such as overdrafts, replacing them with cheaper debts. Another possibility is to renegotiate the debt directly with the creditor.
When viewing organized finances, believe me: you will have a broader sense of how to settle debts and better deal with your monthly costs.
Practical tips to get out of debt in 2022
We know that being in debt is a headache, but with a few steps you can solve your financial problems to stay in the black. Check out:
1 – Write down everything
To keep track of your bills, remember to write down all expenses. That way, you’ll know exactly where your money is going. Another point is not to get lost amid the various payments that need to be made. Use spreadsheets and check every month.
2 – Have financial goals
One of your goals for 2022 may be to get out of debt by the end of the year. With that goal in mind, you can separate the most important debts and create strategies, such as paying the most expensive bills in the first half. In addition, you can also divide the goals by month, and take one step at a time.
3 – Organize the budget
A fundamental attitude to get out of the red and get rid of debt is to organize your budget. You can use a smartphone app, a computer spreadsheet, or even a notebook. Here what matters is that you write down all the money you receive in the month and all expenses.
Write down your salary, bonus, retirement, money from odd jobs, among others. And expenses need to be detailed, so you can cut what is unnecessary.
4 – Talk to your family
It is very important to involve the whole family in organizing the budget and in the process of getting out of debt. Each member of your household can help with ideas to lower the bills or earn more money, such as taking on extra work or selling items you no longer use.
5 – Cut your expenses
While you’re in debt, it’s hard to make bigger dreams come true. So for a while it will be necessary to tighten your belt and cut some expenses. Remember the small savings, such as:
- Turn off the bedroom light when you leave;
- Put the shower in the summer position in the hot period;
- Gather the clothes to use the washing machine at maximum capacity.
Know that the lifestyle and needs of each family will indicate which expenses can be cut. But don’t forget that to get out of debt, you’ll need to make an effort.
Sometimes, it is not enough to dry the bills, because even with all the possible cuts, there is still a lack of money to get out of debt. If that’s your situation, the path may be extra income. It could be with a job in the hours that were free, beaks on weekends or even with sales.
You can get rid of items you no longer use or create products, cakes, sweets, crafts, and sell to friends, neighbors or even on the internet. Find some activity that you know how to perform well and start undertaking it.
7 – Negotiate your debts
With your budget in order and with savings from spending cuts or extra income, it’s time to look for your creditors. With cash in hand, it’s easier to negotiate and get a discount.
8 – Prioritize debts with higher interest rates
If you have more than one debt, the first step is to figure out which one you owe first. The important thing is to prioritize the debts that have the highest interest rates so as not to become a snowball.
9 – Research before you buy
This is a tip that is useful for all consumers, but for those who are in debt it is essential! Researching before buying any product is the guarantee that you will find the best price and, of course, save money.
Even if what you intend to acquire is a loan to pay off a debt, you need to research.
10 – Cook at home
A recent study by Guiabolso showed that spending on food delivery apps consumes more than 8% of consumer income.
If you also have difficulty controlling this type of expense, cooking instead of ordering meals through an app may be the solution. To make adopting the new habit easier, consider that the amount saved can be used to fulfill a dream or guarantee an emergency reserve.
11 – Be careful with installments
Paying in installments is easy, as it allows the acquisition of high-value products that, if purchased in cash, would consume a large part of the monthly budget. But the installments out of sight can also be negative in your attempt to pay off debts.
Try to pay in installments only what is essential, such as higher value items, and try to pay lower costs in cash or in shorter installments.
12 – Do a self-assessment
Finally, the last tip is to propose a reflection. Stop and think about what happened to get you in this situation. This is important for you to avoid default in the future and know how to get out of the problem as soon as possible.
By following all these steps, you can get out of debt once and for all. In addition to keeping your name clean, you will still be able to access credit to make your dreams come true.
Is it worth renegotiating debts?
Renegotiating debts is undoubtedly one of the main ways to achieve the long-awaited financial health. Renegotiation can be done directly with the creditor, either at fairs to clear the dirty name, or through debt refinancing – and portability from one institution to another.
Start by looking for official channels of the financial agent where the credit was contracted – even to avoid falling into fraud. A positive point is that, in most cases, it is possible to request a renegotiation completely online, in addition to carrying out simulations of the new loan conditions.
Before renegotiating, however, it is important to try to understand the scenario in which it is inserted and what will be the best way to do it. That’s because non-payment of the renegotiated debt with the creditor can be even worse for you. Stay tuned.
What to do to not get into new debts?
Be careful not to make new debts:
- Escape easy credit: it can come with higher and abusive rates.
- Update your financial spreadsheet whenever there is movement, whether incoming or outgoing.
- Cut excesses to balance income and debt.
- Don’t make debts with 13th, termination or other extra income.
- Even as you pay off your debts, set aside at least 5% of your money for unforeseen circumstances.
- Before purchasing a new product, research and collect the money to buy in cash, so that you can have more purchasing power.
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