The country is still recovering from the devastating effects of one of the worst crises in its history, struggling to develop its economy as many Brazilians struggle to pay off debt and take their names off credit protection records. So much so that the theme was protagonist in the government projects presented by presidential candidates in 2018, did you notice? We will see throughout this post that repaying debt is indeed possible, provided you have a little planning.
But beware: you also have to keep your eyes peeled for the pitfalls that can come your way, see? With that in mind, we prepared a shortlist of the 7 main mistakes when negotiating and paying off debts. Check-out!
Tips for Paying Off Debts
1. Do not create a financial plan
The key to getting all debts off (or actually meeting any other kind of financial goal) is planning. Financial planning is nothing more than a map containing the route between the financial level you are in now and the place you want to be in 6, 12, 18 months…
To prepare your financial plan, you can start by writing down all the family’s expenses and income, not forgetting to include any seasonal or occasional moves such as the car’s IPVA and the thirteenth salary.
With this information in hand, you can already think of adjusting the family’s standard of living so that all spending is limited to 70%, 80% or at most 90% of revenues. This is the margin that will be used to attack debt.
2. Do not prioritize debts
A very common mistake at this time of financial reconstruction is to prioritize other financial goals over debt repayments. This is the case, for example, with the debtor who decides to save to invest or to acquire equity without first paying off what he owes.
This strategy is not financially sound because the # 1 priority within any financial planning should be full debt repayments as they generate interest expense, late fees and other financial charges that provide absolutely nothing in return for the debt. Debtor
3. Not being aware of deadlines
Another mistake often made by those who want to clear the name is not being aware of the deadlines of debt. At first, this means getting organized to never pay anything overdue, as we know this is synonymous with higher interest rates.
Secondly, paying attention to maturities means realizing that the longer the maturity, the greater the total amount of debt will ultimately be. In many cases, long maturities (over 5 years) end up doubling or even tripling the initial debt value!
4. Do not distrust magic solutions
It must be recognized that paying off all debts requires planning, willpower, and above all time. If we create the expectation that the problem will be resolved quickly and effortlessly, we will create huge frustration that will eventually lead to the abandonment of the financial plan.
You’ve probably seen that a lot of financials quickly offer money to negatives, right? But very calm at this time. It is essential to read the clauses very carefully so as not to worsen the financial situation rather than decrease the outstanding balance.
It’s also always good to keep an eye out for supposed unmissable product opportunities that claim to real miracles, doubling the investments made in a very short time. Warning: In most cases, this type of scheme only benefits those at the top of the pyramid.
5. Don’t brake debt size
It may simply not be possible to set aside any budget to deal with the deficit payment at this time. This does not mean, however, that you should not worry about active debts or even worse, may increase the snowball.
Can’t repay the debt? So you have to at least make sure it doesn’t grow or grow as little as possible. So if every month you need to borrow $ 100 from the bank, the idea is to at least reduce that amount. Go to 60, then 30 and so on!
6. Do not negotiate
Many people feel diminished or even obliged to accept any kind of condition imposed by the bank just because they are debtors. If you want to pay off your debts, however, you have to get rid of this mindset as soon as possible.
Remember: you are the customer and the bank has a duty to provide good service. Nothing to subject to payment of abusive amounts or hours and hours of waiting to be met.
In such cases, contact your bank manager or superintendent immediately. If you still can’t be served well, contact the Central Bank or the institution’s internal co-department.
Just like the anticipation of installments, negotiating debt repayment is a customer right. This transaction can often be very useful.
After all, banks know that interest rates are high and that in many cases it is better to receive less than what is due to receive nothing for the prescription of the obligation.
7. Not Considering New Opportunities
Those interested in paying off debt should always be aware of new possibilities. Good examples are so-called clean name fairs, where lenders offer special conditions for consumers to pay off their debts.
Another tip is always to monitor debt collection to see if interest, penalties and administrative fees are being charged within the limits provided for in the contract. Otherwise, the recommendation is to seek help from a lawyer.
In addition, every consumer of financial services in Brazil has the right to take their debt to another bank that offers more favorable terms. It is called debt portability.
Therefore, it is always good to keep an eye on the interest rates offered by other institutions, taking advantage of the best opportunities in the market.
Finally, we could not end this post without reinforcing the importance of sound financial planning for the success of the debt settlement strategy once and for all.
It is important to keep expenses under control by making the standard of living fit the family’s budget. Without balance in the accounts, it is simply impossible to have the regularity necessary to pay off debts.
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