Debt Repayments | Consumer Assist
In today’s tough economic climate, debt repayments become the undoing of many a consumer. Interest rate increases can add thousands to your monthly debt repayments and can push consumers perilously close to defaulting on their repayments. However, there are several ways to reduce your debt repayments.
An often-overlooked source of debt relief is of course to stop incurring more debt! Do not buy articles that you do not strictly need. For example, stop buying clothes on account and there will already be some relief once the clothing store bills dry up.
One of the short-term solutions is to restructure your home loan. By extending your home loan repayment period, you can boost your cash flow through the smaller repayment amount. However, this also means that you are paying more interest, so you should only use this as short-term relief and then revert to the shorter repayment period the moment you are in better financial shape.
Another home loan-related avenue is to consolidate all your debt into your home loan. Many smaller debts incur more interest than one large amount and if you can pay off your debt through your home loan, you can pay back the money at the lower home loan interest rate. There will be fewer accounts and lower account fees, and you will have a longer period to pay back the money.
People sometimes raise cash for debt repayments by selling assets. This is seldom a clever practice, because you end up losing a lot more than you had gained. However, trading in an expensive car for a more affordable one can put back much-needed funds in your pocket. Scaling down is prudent in pressing times and more basic living can free up a lot of cash. If you happen upon a cash amount and you intend to pay off some of your debt, put the largest sum on the debt that cost you the most interest.
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