Need to manage your debts? Pay attention to these 10 steps.

10 steps to better manage your debts

Family budget is at the limit and needs to get out of a situation of default? DECO PROteste shared 10 strategies, cited in the Notícias ao Minuto, to help those who need to quickly manage their debts.

"The household income has increased, trips to the supermarket are getting more expensive, the fridge had to be replaced, and the money doesn't stretch until the end of the month. When you realize it, the last two installments of the car are still unpaid and the credit institution demands the debt to be settled", reads the statement by DECO PROTeste.

Check out the recommendations shared by the consumer defense organization: 

Avoid making more credit purchases.

"Not able to pay installments? Increasing debt will not help solve the problem. If you often use a credit card or store loyalty card (with credit option), always try to settle the card statement in full, to avoid paying high associated interest. In practice, you postpone the payment of the expense by about a month."

Make a household budget

The first may take a while to make, as it needs to be structured, but the more you use it, the easier it will be to keep it up to date and take full advantage of this powerful personal finance organization tool. The budget should include all household expenses and income.

Include both fixed expenses (such as water and electricity bills) and variable expenses (clothing, health, and leisure). Also, have an emergency fund to cover unexpected expenses, like appliance repairs or illness. If possible, create savings for long-term goals, like a comfortable retirement.

Register all your daily expenses

"Early in the morning, have your coffee at the neighborhood pastry shop and buy a scratch card. Is it worth noting this expense? Yes, it is. It is not only the big expenses that consume the family budget. Several small expenses, when added up, can make a big difference to the balance of the accounts. By recording all the values, even those that seem insignificant, you will know exactly where your money went."

Eliminate superfluous expenses.

If you are trying to rebalance your budget, it may be necessary to eliminate unnecessary costs. Stop for a moment to think where you can cut. If your debts are not too high, it may be possible to make adjustments without significantly compromising your quality of life. An example is taking your lunch in a lunchbox more often, instead of eating every day at the restaurant next to work.

If your debts require more drastic measures, you can cancel telecommunications packages or subscribe to more basic plans, for example. Making all meals at home also allows for substantial savings.

Read more: Managing a household budget? Get to know the 50/30/20 savings rule

Make smarter purchases.

"Even in times of financial austerity, it may be necessary to make purchases that put some weight on the budget. For example, if the washing machine stops working, you will have to replace it. However, it is possible to save on these purchases by choosing good models with a lower cost than others of similar quality. DECO PROteste offers a series of online comparators that help make the best decisions for your wallet."

Increase your earnings.

Many people turn to a second part-time job to ensure extra income. If your situation doesn't require it, there are still ways to make some extra money. One of them is selling items (clothes, furniture, bicycles, etc.) that you no longer need.

If you have a hobby related to crafting, why not start making money from it, combining the useful with the pleasant? Create business pages on social networks and/or start attending craft fairs and markets.

Create a piggy bank

Channel all the money you can save or earn from this change of habits into a piggy bank dedicated to paying off the debt(s). It doesn't have to be a physical piggy bank. You can open an account at the bank just for this purpose or set aside the money in a savings account linked to your usual checking account. Use the money saved to make debt repayments.

Organize a ranking of credits.

"Have only one credit? The situation will be simpler to manage. But, if you have more than one, in case of financial difficulties, you may need to decide which one to pay first. Prioritize the one with the highest interest rates, as they weigh more on the family budget. After managing to pay off the credits at the top of the list, it is likely to be easier to settle the remaining ones."

Set up objectives.

Having specific goals helps create a personal commitment to debt repayment. For example, define how much you want to pay per month. If you can't commit to such a strict goal, you can decide to pay off the debt by the end of the current year or within 18 months. The important thing is that after setting the goal, make an effort to emerge victoriously from the challenge.

10. Renegotiate the credits

If, no matter what you do, you are not successful with the previous measures, approach the creditors and try to renegotiate the conditions of your loan. Credit institutions are not interested in customer default, so an honest conversation may lead to a more favorable outcome for you. Remember that it will be easier to renegotiate before defaulting.

Also read: Home loan renegotiation: How to improve the conditions of your loan

Follow Poupança no Minuto to access more similar savings tips with their credit and insurance products, or contact us directly to proceed with credit renegotiation or transfer (for a cost-free process):