Debts and loans are a nightmare to many. Unplanned spending, overspending, lack of knowledge of credit policies can bring a consumer into overdue debt. Debts that are unpaid beyond the date of repayment are termed as overdue debts.
No borrower can get out of overdue debt overnight or in the wake of a morn. In most cases, it takes much time and is a very slow process. It might take several years to get out a long due debt.
One need to be more than committed to finish and let off an overdue debt.
Follow the steps below to help yourself out of an overdue debt scenario:
- Self-introspect and find out how you got into the overdue:
It is very essential to do introspection where you went wrong. Landing up in overdue debts owes to bad and exorbitant spending habits. Overcoming bad spending habits is the only solution to getting over the due debt. This may not be the case always. It could be due unfortunate and unavoidable circumstances like medical circumstances, job loss, etc. It could even be a business loss or failure. The goal here is to find out the lead to the overdue debt with the intention to avoid it further and plan for any exigencies.
- Change your bad spending habits:
Once you have realised where things went wrong, it is time to correct yourself. It is time to bring your spending under control. Make a list of all your regular expenses. Categorise them clearly to know how much money is going where. Find out what percentage of your income is spent on each expense.
Now, you know where and how much is being overspent. You will be able to know clearly which is that not so important category is eating up the money. Curb that category of expense to suit your income. Exercise a control on that expense. For example, a substantial amount is being spent on recreation; you need to bring that under control. Maybe in certain cases, you will have to cut it short completely.
- Calculate and find out exactly what is the overdue you have:
Did you till now to find out what the exact over dues are? Now face the hard reality, make a list of all your debts. Figure out how much exactly you owe to each debtor. Make the calculation with the precise interest to each loan. Keep handy the billing statements and loan account details to arrive at the exact amount you owe. Find out the minimum amount you need to pay monthly to get your credibility into shape.
- Find out how you can get hold of that extra money to repay the overdue debt:
Paying just the minimum required may take you much longer to get over your debt. The cost of credit or say, the interest will also be an added burden when you pay the minimum. To get off the overdue, you have to take that extra strain of spending more on the repayment. Rack your brains to find out how to get that extra income to spend the extra to pay off your overdue.
- Plan how to repay:
You can simplify the repayment by prioritising among your loans. Keep the interest on the loan as your criteria to repay the loans. Accordingly, prioritise the loan that you want to finish first. You can also pay lump-sum to close any one full loan or part of it to reduce the overloading interest.
- Repay the overdue diligently:
Once have realised where your setback happened and how much, and how you need to repay, it is now time to diligently and consciously make the repayments at planned intervals without any failure. It may take two years to complete the repayment. You will have to keep track of your overdue payment to avoid any further default. Depending upon your increasing income, you may choose to make additional part payments which will help you in reducing the tenure and the cost of credit. You can also use any additional income like the bonus, dividends, etc. to contribute to the repayment.
- Overcome the setbacks and bounce back:
Making a huge overdue repayment is not a smooth sailing. It might turn out very discouraging at many times, but you will have to keep your spirits up to revive to a better position. Keep your calm and continue with your repayment. You may encounter emergencies during the period of repayment, but you will still have to be determined to make your repayment on time.
You will find it encouraging when you see your outstanding amount reduce. Yes, it is indeed a relaxed feeling to see your debts reducing.