Common Types of Debt and What to Do About Them

There are different types of debt and even though you may have one or more of these debts, you are able to get out of them. You need to be able to take control of your debts and pay them off. Here is how you can tackle the different types of debt.

Credit Cards

You need to take stock of all your credit card debt and write down exactly what you owe as well as the interest rate on each card.

You should contact each of your credit card issuers and explain to them why you are not able to repay the amount that you owe and inform them of what you can afford and see if they are willing to agree to a lower amount. You might also be able to negotiate a lower interest rate for each card.

Once, you know what you owe, you need to calculate how long it is going to take you to pay everything.

This will help you to know the amount that you will need to repay each month and you will have a set goal of when your debt will be paid.

You should arrange your credit cards from the highest interest rate to the lowest and pay them like this.

You should aim to pay more than the minimum amount, but if you are on a tight budget then pay the minimum each month and try and make the same payment a couple of weeks later. Making the minimum payment twice a month until your debt has been paid.

As you are paying off your credit card debt, you should avoid creating anymore debt. You need to look at your expenses, create a budget and stick to it.

Medical Bills

Medical bills can be highly expensive and they can add up quickly. Medical debt can be hard to handle and you will usually not be in a position to turn down the care even if you can’t afford it.

The first thing that you should do is check your medical bills for any errors and that you actually did use all the services they are charging you for. You can also negotiate on your medical bills.

Also, see if they are willing to set up a repayment plan with you at a rate that you are able to afford.

Wait…There are a couple more types of debt…

Mortgage

There are ways you can reduce your mortgage and save money. When you put in the effort to pay off your mortgage early, you will own your house, which means no one can take it from you and you will be able to free up some extra money.

When you refinance your mortgage, you can decrease the interest rate that you are paying, which will then help you to save on your mortgage.

It might be a good idea to extend the timeline of your loan, which may sound counterproductive but the amount that you need to pay each month is lowered. You can also still pay the original amount on the lower plan as this will help you to pay it off quicker.

You should try and make a plan to repay your mortgage as quickly as possible at a rate you can afford.

Student Loans

Education debt is becoming more and more common, but there are ways that you are able to reduce student loans.

Scholarships are awarded based on academic achievements or on a financial need. You could apply for various scholarships and even if you are awarded various scholarships for smaller amounts, it is still money that you don’t need to generate debt for.

A grant is similar to a scholarship, but these are usually awarded by the government or organizations.

It might be an idea to work part time jobs and use your earnings to help pay for your education, so that you can reduce the amount that you need to borrow. You could also work before heading to university and save the money you earn to pay for your education and avoid borrowing money altogether.

You should see if your lending company is willing to work out a repayment plan with you, once you have a job and are earning an income. They might be willing to reduce the amount that you owe or plan the repayments around your current level of income.

Student loans are tricky because you might not have been aware of what you are getting yourself into before you took the debt on. You will need to create a budget, so you can pay more towards the debt or make multiple payments a month so that you can pay your student loan off ASAP.

With debt, you will need to do a lot of thinking and understand that you will have a lot of work ahead of you. You need to understand all the consequences of your debt, especially, before you declare bankruptcy or settle your debt. It is a good idea to seek the help of a financial advisor and find out what they recommend.

Debt can be stressful and dealing with debt can feel overwhelming, but you can’t ignore your situation. You will need to deal with your debt and speak to your creditors to see if you can come to an arrangement, so you can pay off the debt.