Some people may find it difficult to pay off their debts and other financial obligations, and may end up being overwhelmed and unable to keep up with such commitments. This can lead to greater financial problems and deeper complications that extend to other aspects of their lives, such as losing their homes or facing lawsuits. Unfortunately, in many such cases, reckless financial habits and practices are to blame.
No matter how hopeless your debt situation may seem, there are solutions available that can make paying off debt faster and a whole lot less stressful. If you are ready to get out of debt, consider these tried and tested methods to help you live a debt-free life.
Have the Willpower to Beat Your Debts
Willpower is one of the most important factors that will help you work up a financial plan to repay your debts and execute your plan successfully. The hardest part is deciding to get rid of some of the wrong financial habits that may have caused all your debt problems.
Therefore, the challenge is to commit yourself to making debt repayment your top priority. You must stick to your plan of meeting repayments at their scheduled due dates, even if it means that you have to cut back and sacrifice on other expenses. Make sure you follow a budget and only spend on essential commitments and living costs so that you are able to save most of your income and put it towards debt repayments.
Avoid Paying Extra Fees
Unfortunately, many people get caught in a vicious circle of high finance fees that makes their debt payments expensive and difficult to keep up with. Doing your research and comparing the costs of financing across banks can help you avoid such a situation.
For example, if you want to get finance from a bank or a finance company, you should compare the costs of finance products offered by different providers. What is most important is the difference of cost to you over the whole financing term and the annual percentage rate (APR) that they charge. The Saudi Arabian Monetary Authority (SAMA) requires banks and finance companies to disclose this fee to enable customers to assess the actual cost of finance provided.
Increase the Monthly Amount Allocated for Debt Repayment
In order to pay off your debts as quickly as possible, increase the monthly amount you have set aside for debt repayment, especially if the debts have a higher profit rate associated with them. When the amount of the monthly instalment is increased, the repayment period of the loan becomes shorter; therefore, you will spend less on it over the entire financing tenure. It is therefore advisable to give priority to the repayment of high-cost debts, or to those that incur a fine in case of repayment delays.
Do Not just Pay the Minimum Payment Required on Your Credit Card
Some credit card holders may be complacent about their credit card debts and pay only the minimum amount required every month, which is usually a much smaller percentage of the full outstanding amount. This means interest rate will be charged on the outstanding amount, and this will be added onto the outstanding balance that you have to pay the following month.
Therefore, you must pay the amount owed on your credit cards in full when the payment is due so that interest does not accumulate every month.
Reach Out to a Financial Advisor
If your financial situation changes as a result of a decline in your income, loss of employment, retirement, or a financial emergency— which results in your inability to pay off your debts and financial obligations—, you should seek the help and expertise of an authorized financial advisor. A professional financial advisor can help analyse your financial situation and guide you to the best and most prudent way to act in such circumstances.
It is worth noting that all banks in Saudi Arabia are required to provide credit advisory services free of charge to their finance customers under the Banking Consumer Protection Principles as directed by SAMA in 2014. This is to assist defaulters and to offer them guidance to overcome financial crises with minimal impact on their finances.
Look for Appropriate Banking Solutions and Services
Many people accumulate debts due to the excessive use of multiple credit cards or obtaining more than one finance product at the same time, rendering themselves unable to repay those financial obligations. If you are faced with such a situation, look for solutions, products and services appropriate for your financial circumstance.
Banks offer diverse solutions and products to suit the needs of different customers. Do not make your financial crisis worse by making improper decisions such as resorting to unlicensed financial institutions or individuals who claim they can help you pay off your debts. Such dubious traders exploit others during their financial crises and tend to make their situation worse by getting them into larger debts or causing them to fall victim for fraudulent scams.
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