So you’re in debt and you’re having a difficult time keeping up with your repayments. It might feel like you’re ‘in over your head’ and gasping for air, and it may seem as though there’s nothing you can do to get yourself out of that hole. However a lot of the problem here is not getting a perspective on the problem and really quantifying the situation your in. The point then is that many people simply don’t know how much debt they’re in or how much interest they’re going to pay. At the same time they don’t know how much money they need on a day to day basis or what money they have coming in even. This then leaves them unable to come up with an action plan or solution to their debt problems, and means they are more likely to make mistakes that land them in more debt.
Thus it is important to calculate your debt and to make a note of all the other relevant numbers you’re working with. This means making some time to do some basic accounting, but by calculating your debt and keeping track of your income and outgoings it is possible to recognize the situation you are in and to budget effectively and you can make a plan of action regarding how to earn the money you need to pay the loan back. For instance by knowing the exact amount leaving your account monthly you know how much you can spend without damaging your ability to pay back your repayments. Make sure you are aware not only of the exact amount of debt you owe, but also how much this comes to when you add interest – so how much you actually are going to be paying back.
At the same time if you calculate your debt then you will be able to make more informed decisions as to how to organize your repayments. You can find out too if you are paying over the odds in terms of your interest and then you can use this information to look for other rates with other companies. You don’t just need to calculate your debt then, but also to make sure that you make a note of how much other lenders charge etc. This way you can use financial modeling techniques in order to workout how your finances will be affected by changing to a new credit company.
When you calculate your debt in order to see how it would grow or shrink after being transferred to other companies, it is also important to take into account transfer fees and other potential hidden costs such as loan repayment insurance in order to more accurately calculate whether this would be a good move.
In other words the more you understand the exact value of your debt, your other finances and the better you grasp your alternatives – the more equipped you will be to begin making positive changes to your situation.