Also according to the report, according to Credit Protection Experience, in October 2019 the number of debtors broke the record of 63.4 million people. With so many indebted people, we were able to understand the change in priority in the goals.
If you fit in with what has been said so far and also want to improve your financial situation in the new year, this article is for you. Continue reading and check out some tips that we separated on how to negotiate debts and get out of the red in the year that begins!
Negotiating debts: where to start?
Many people who want to stop being in debt become desperate when they finally realize that they need to save their financial lives, which are usually all messed up. Generally, to put order in the house, they decide to dedicate themselves to budget spreadsheets.
Some people spend hours planning and making projections. The problem is that, in most situations, as the months go by, the individual feels frustrated because nothing changes. It seems that all the time trying to organize has been wasted, the finances are still disorganized and there is no money left over even to think about how to negotiate debts.
To fix this and be more realistic when making projections, the best way is to start recording your daily expenses. That way you will be able to get a much better sense of how your financial behavior is going.
With expenses noted, separate them into three categories:
- Common expenses: those that you know you will have every month, like supermarket, gasoline, in short, everything that is necessary for survival.
- Installments: to negotiate your debts you need to know all the installment purchases you have.
- Financing and loans: here come from the longest financing – like a house, for example – to the short term. The same goes for loans: don’t leave anything out.
The next step in starting the process of negotiating debt and getting out of the red is to organize yourself financially effectively. For this, two strategies can be adopted, which we will talk about next.
Attack the installments
Keep in mind that when an installment of your list ends, a new flow of money is generated, allowing you to gradually free yourself from debt. For this, of course, it is important that no new debts are created with installments.
Once the installments are eliminated and that part of personal finances is on track, use the remaining money to prepay loans and financing.
Anticipate loans and financing
As with installments, each closed loan / financing is an extra amount of money that is at your disposal. When it comes to negotiating debts involving these two items, it is important to think about a negotiation strategy. Some points to be analyzed:
- Check with the lender what the discount percentage on the total debt will be;
- Ask about the cash payment (will you have a bigger discount?);
- In the case of credit card debts, check with the bank which negotiation can be made regarding payment terms and amounts.
In addition, whenever you are negotiating debts, ask for a written proposal. Still with regard to loans and financing, it is important to pay attention to another point that we bring below.
How to negotiate debt: choose the right debt
Once you have your entire list of expenses separated by categories and are working to settle your debts, it is essential to keep your head in place.
If you have a high indebtedness, which includes more than one debt, choose to start with the one that most increases due to interest as time goes by, or the one that can cause more problems (such as debts on overdraft, card with basic services such as electricity, water, etc.).
Personal finance is about planning, and that includes planning for which debts to start paying off. Depending on the case, choosing the wrong debt can take the financial organization process a little longer.
Also remember that there is something crucial about how to negotiate debt: under no circumstances fall into the mistake of making a new debt. So when you trade them, do it according to your possibilities.
Debts paid off, now what?
In the study mentioned at the beginning of the article, for 2020 Brazilians want, after paying their debts, to travel on vacation, learn English and save money.
So that you can really maintain a financial balance, our suggestion is to skip to the fourth item. So, in addition to going out of debt status, you will become a saver.
With the habit of saving money you will see that all the other goals on your list will come true in a healthy way. That is, without having to start another year worrying about how to negotiate debts.
So when you get out of the red, start investing. A good tip is to build your emergency reserve, which will be necessary for the normal unforeseen events that we may have (and the reserve is equally essential for you not to fall into the error of starting a snowball again with installments, debts and financing in case you cross some problem).
Knowing how to negotiate debts and act to get out of the red can take some work, but the result will surely be worthwhile. In order to achieve this goal, take one step at a time. Summing up:
- Draw up a real budget, with projections that are really real (adopt the tip to start recording your expenses and know your consumption habits),
- Completely eliminate installments;
- Settle debts with loans and financing;
- Start saving and make it a habit.
And since we talk about goals for 2020 and how to negotiate debts, how about adopting 7 habits that can influence your financial life? If you want to know more, be sure to read this post.
How to make your money work for you?
Learning how to invest your money better and making good investment decisions, according to your personal planning, is the only way to make your money work for you and achieve all of your financial goals.
Do you want to accelerate the achievement of your financial freedom? So click here and learn how to make your money work for you now!