A survey by Good Lenders shows that more than a third (36%) of people paid interest for using Overdraft in September. Overdraft is one of the most expensive loan types in the Brazilian market. While payroll-deductible loans charge 27.8% per year (aa), according to data from the Central Bank of August, Overdraft rates reached 253.2% per year. If you are one of those people who are involved, see the tips we’ve selected to help you out of this situation:
Step by step to rebalancing finances
Organize your expenses and income
The most important measure for people who are in debt is the organization. It is necessary to have a broad view of the problem. List all debts in detail, including the amount of the debt, how long the account has been in arrears, the interest rate, among other details.
Also list all available sources of income and assess whether there are assets that can be sold to raise more funds. The help of family members is welcome because they may charge lower interest rates than what you are paying. Then, put all your monthly expenses on the spreadsheet. There are applications that already do this automatically, such as Good Lenders.
Define how much you can reserve per month
With organized spending, it is easier to define how much of your money will be used to pay debts. To make a more accurate planning with respect to the values, you can also estimate how long you want to pay them off.
Renegotiate your debts
You can save money to pay a larger number of installments and ask for a discount on the interest rate or even offer a cash value to settle the debt immediately. If the contracted debt has very high interest rates or installments that hinder the payment process, talk to your manager and ask about the possibility of exchanging it for a loan with lower interest rates or renegotiating it to define installments that fit in your pocket.
Don’t take out loans
It is very important to understand that in order to save considerable amounts, you have to work hard. Even if you have already paid the pending installment of the month, do not waste it. Put aside your credit card, installments, always try to pay in cash and spend only with what is strictly necessary. At the moment, your goal is to reduce expenses.
Cut expenses and set aside money to pay the debt
To be able to pay off debts it is essential to set aside a certain amount per month. An alternative is to increase the source of income, doing extra work, for example. In parallel, it is necessary to practice self-control and cut unnecessary expenses. If you are very indebted, try to adjust your standard of living to get out of the red. Prioritize essential expenses, don’t buy on impulse, search for prices, take advantage of groceries promotions, leave without a credit card and escape the temptation of overdraft.
Pay the most expensive debts first
If you have different debts, give preference to those that charge the highest interest (if you don’t know what they are, you need to find out!) And to the most important ones: the pending issues involving services that you really need, but will be cut in case of non-payment.
To put our guide’s tips into practice and get rid of debts, discipline is essential. Understand that the change in the financial routine is temporary. The bright side is that you now know how to handle money and you will not make the same mistakes. Getting out of the red requires total commitment on your part, don’t be discouraged!