Do You Know How Much Your Debt is Costing You?
How Much is Debt Costing You?
It’s fair to say that debt doesn’t just become a problem overnight.
Debt will typically take months or even years to build up before it starts to feel like a serious issue in your life.
When it reaches this point, you then need to think about fixing the problem.
To do this, you need to make sure that you start making payments each month.
Monthly payments to cover your debt may not seem like that much because they feel manageable but they could be costing you a lot more than you realize.
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How Do You Find The True Cost Of Your Debt?
The first point to think about when you are exploring the real cost of your debt is always going to be the interest.
It’s possible that you have an average interest rate.
But even an interest rate under 5% could add up to thousands in extra costs over just a few years.
This is always going to depend on how much the initial debt was.
Don’t forget, a lot of debts like credit cards also come with interest rates that are a lot higher.
Indeed, it’s not uncommon for interest on credit card debt to reach upwards of 20%.
This is one of the reasons that debt can become completely unmanageable in a short period.
At this rate of interest and with low payments it could take you decades to pay off the full amount of the debt.
What Are You Missing?
Ultimately, the money that you lose through your debts building is money that you would otherwise have been able to spend elsewhere.
We could all do with an extra couple of thousand or even a couple hundred in the accounts.
This is why you need to think about more than the monthly payments.
Particularly, if currently, the debt is going to take years to erase.
You also need to look at how you can reduce your debt.
How Should You Reduce Debt?
There is a range of ways that you can reduce your debt.
If, for instance, you have debt from multiple creditors then you can think about a debt consolidation loan.
A debt consolidation loan is useful because it means that you will be paying one bill each month rather than several.
You should also be able to get a debt consolidation loan with a lower level of interest.
As such, you can stop your debt growing as rapidly.
You just need to make sure that you have the right credit rating.
A poor credit rating can stop you from accessing an option like this.
If you are interested in learning more about debt and different ways to deal with your debt then please make sure that you contact us today.
A friendly member of our team will be happy to help and ensure that you find the answers that you need.