6 steps to end debt

To get out of debt, you need commitment and a change in your attitude towards finances.

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Millions of Brazilians want to get out of debt. The lack of financial education, planning and, of course, the rising cost of living are the main reasons for this situation.

Some people create unbearable debts, others have difficulty saving to create an emergency fund, and there are also those who don't know how to set up a financial plan.

Despite all the difficulties involved in the process, getting out of debt is not impossible.

To help you, we have put together some practical tips that will help you change this situation. Check them out:

 1. Start controlling your financial budget

The first step to getting out of debt is to start controlling your financial budget.

To do this, you must check all the inflows (income) and outflows (expenses) of your money.

This means that you will need to analyze everything you spend each month, such as rent, food, financing, internet and telephone, streaming services, leisure, etc.

By organizing your finances, you can discover which of these expenses can be eliminated or reduced completely.

Therefore, before anything else, analyze your financial budget.

It is important to remember that your standard of living must be consistent with your spending. Otherwise, even if you manage to pay off all your debts, you may soon be in the red again.

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2. Calculate the total amount of debts

Understanding the real size of the problem is also essential to organizing your finances.

It can be scary to be faced with the exact amount you owe. Or, you might even realize that you don’t owe as much as you thought!

In any case, in order for you to plan, you will need to face this value.

Take all the bills you have to pay, whether they are monthly or old expenses that have not yet been paid.

To account for all of them, you can use a program like Excel, or else, take notes in a notebook.

The sooner you face your debts, the better. After all, your situation may be reversible!

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3. Set a monthly savings goal

Experts say that the ideal is to save at least 20% of your income for investments.

However, if you still can't save that amount every month, start with what you have.

If you can currently save only 5% of your income, great! As long as you commit to saving that amount, of course.

As important as paying off your debts is changing your habits to save money or even, invest your money (this way, you accelerate your financial growth).

When saving money becomes a habit, the chances of getting into debt again are much lower.

Many people, when they pay off their debts in full, feel free again to spend all the money they earn.

The result of this? New financial issues and a lot of worry.

Therefore, even when you pay off all your debts, don't lose the habit of saving and investing your money.

In times of emergency, all the money you have saved will make a difference.

4. Negotiate with creditors

After understanding the size of your debts and making a financial plan to discover your monthly payment capacity, it becomes much easier to negotiate old debts with creditor institutions.

But before you approach any company, set a limit on how much you can afford to pay each month.

Ask for a debt payment proposal. Then, check whether the amount suggested by the creditors is in line with your situation.

Many people, when they are in debt, become desperate before even looking for a solution.

The good news is that it is possible for you to negotiate your most expensive and oldest debts.

Therefore, do a deep analysis of all your current debts, income and expenses, to understand how much you can really pay.

By negotiating debts (as long as you are sure that you will be able to pay them) you can not only clear your name, but also obtain lower interest rates and organize your finances.

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5. Evaluate the possibility of using the FGTS to pay off debts

Yes, it is possible to use the Severance Pay Guarantee Fund (FGTS) to pay off debts.

But before using the your FGTS For this purpose, evaluate whether it is worth using money that is saved.

If the interest on your debts is higher than the FGTS income, then using this money to pay off your financial debts is a really good decision.

This option offers the possibility of withdrawing funds deposited in accounts in your name and using them to pay debts.

In fact, if you are thinking about using the FGTS to solve this problem, you have yet another reason to try to negotiate with the creditor institutions.

The ideal option is to pay in cash to get a good discount. However, if this is not possible, consider paying a large down payment and paying the remaining amount in installments.

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6. Talk to your family members

Getting out of debt is a goal that often involves the entire family.

Therefore, it is important that all members of the household commit to controlling spending and avoiding unnecessary expenses.

Paying off financial debts is a process that involves several challenges. However, it is something that is really worth it, since by paying off your debts, you will have more peace of mind and a better quality of life.

It is important to talk to family members so that they understand the real financial situation of the household and thus feel motivated to collaborate.

Changing financial habits becomes much easier when the whole family is working towards the same goal.

Explain that the intention is to make some temporary sacrifices to eliminate financial debts. However, even when all debts are paid off, the idea is to maintain good financial habits to avoid new debts.

Conclusion

Getting out of debt, although difficult, is completely possible!

But for this to happen, planning, motivation and a change in financial habits are required.