How Organizing Can Help With Rising Interest and High Payments
As the government raises interest rates in their attempt to temper inflation, individuals who have variable interest rates on their debt and those who are looking to obtain new loans are faced with significantly higher payments. For some whose payments on existing debt are going up, payments may soon become unmanageable (if they’re not already).
Like most things in life, however, a little bit of organization and a plan can help in this situation.
Do you have a plan to pay off your debt? If not, now is a great time to get organized and make a plan to eliminate debt, and with it the high interest payments.
Step 1: Identify all the places to which you owe money. If you don’t know them all a good place to start is with a free copy of your credit report from each of the 3 main bureaus. Take note of every payment you make that could be terminated by making a lump sum payment. (You don’t have to include your mortgage here, unless it’s a variable interest rate.) Payments such as for a car loan/lease count, but your cable bill doesn’t.
Step 2: Collect statements from all creditors in order to verify how much you owe. This may include printing out the latest online statement or calling to find out the balance of your account. This step may be the scariest, but facing the truth will make you stronger, I promise!
Step 3: Sort your list in order by the size of the balance, smallest to largest.
Step 4: Contact the creditors and attempt to negotiate the interest rates. If the rate is variable, try to get a fixed rate and if it’s already fixed, ask about having it lowered. While you’re at it, close the account to new debt so you don’t get yourself back into trouble. As a bonus, if you have older debt that you haven’t paid towards in a while, ask if they will negotiate the amount owed.
Step 5: Determine how much extra you can pay towards your debt each month. This might (probably will) require doing a budget or spending plan.
Step 6: Pay off the smallest debt as fast as possible. No, I don’t want you to pay the highest interest rate first. I want you to win and having a smaller balance paid off quickly will provide you with motivation to keep going when the going gets tough.
Step 7: Repeat step 6.
The increase in interest rates could be looked at as a good thing for those who are disorganized with their debt and who don’t have a plan to eliminate it. If that’s you, use this as a push to get organized with your debt and to make a plan to get out from under the weight of the interest you’re paying.
If you need help going through the process I’ve outlined here, contact Fontaine Organizing for guidance and support.
