Negosentro | The Biggest Challenges You Face When Paying Off a Debt in a Crisis like COVID 19 | Paying off a large debt is never easy, and there are going to be challenges along the way.
Let’s forget the simple challenge of having enough money to meet your monthly payments and focus on some of the other challenges that will hold you back from paying off your debt.
Many of these challenges are within your control, and by planning for them, you can make your life that bit easier when it comes to wiping out your debt.
Not Understanding Your Debt
Debt can be a scary thing, and it’s tempting to shield ourselves from the true scale of it. However, understanding your debt is one of the most important steps towards paying it off.
You need to know what you owe, who you owe it to, and when each bill needs paying in great detail, otherwise you’re likely to get hit with penalties such as late fees that make eradicating your debt even more difficult.
Compound Interest
One of the reasons it’s important to know the details of your debts is because you’re going to be paying interest on each debt. Interest has a snowball effect, which means as your debt grows, your interest payments increase, thus increasing your debt, and increasing the amount of interest you pay.
Different debts will have different interest rates, so if you’re aware of the details, you can prioritize the ones with the highest rates. Once you have the high-interest-rate debts paid off, you can start working on the lower-interest bills.
Creditor Harassment
Creditors want to get their money, and in some cases, they use intimidating tactics to try and force you to pay them. If you succumb to this pressure, this can cause you to make payments that you just can’t afford, further damaging your finances.
You are protected from creditor harassment by the Fair Debt Collection Practices Act (FDCPA), though, and there are regulations the collectors have to abide by.
You can fight unfair lawsuits due to debt collectors, so speak with an attorney if you feel like you are being harassed.
Unexpected Expenses
You can’t predict everything that’s going to happen in life, and sometimes you’re going to face unexpected expenses that you just can’t avoid. This puts a strain on your finances and can make paying your bills that bit more difficult.
Though you can’t predict every expense, you can mitigate the effects by having a monthly budget that includes an emergency pot. The better you plan, the easier it is to react to unexpected events.
A Lack of Help
This is one challenge that’s easy to overcome – a lack of help. There are lots of organizations out there that can help you with your debt, but you’ve got to reach out to them.
There’s no need to go through this on your own, and you’ll find things are much easier if you’ve got a professional giving you advice. Don’t suffer from a lack of help when there’s plenty of support out there.
