Puerto Rico – Just days after the official anniversary of the COVID-19 pandemic impacted Puerto Rican society, it is evident how it affected the economy, family composition, and employment; all this resulting in unplanned expenses.
The latter possibly, by not having an emergency savings plan, increased your debts at home or you have not been able to comply with the creditors.
For this reason, the Personal Finance Coach, Viviana Carrasquillo, invites you to choose to commit to your personal finances this March by evaluating your debts.
As he explained, “they are a payment agreement that you reach with the borrowing party (creditor), which through financing you obtain cash or a good / service mostly with interest. The latter must be paid in a period of time in accordance with the provisions of the contract ”.
Carrasquillo indicated that debts can be short-term (eg, credit cards), medium-term (eg, a car loan payment), and long-term (eg, a mortgage).
Likewise, he pointed out that it is important to keep in mind -when acquiring a debt- evaluate the interests (fixed / variable), comply with the payment date, the time of debt, balance of the debt, and above all comply with the date of payment.
The latter is particularly important to avoid having a situation with your credit. In case you understand that it is difficult for you to make the payment, you should contact your creditors to evaluate the alternatives you have, Carrasquillo recommended.
On the other hand, “another of the debts that you may have during the year is your contribution payment as an individual. The latter you must plan and have it as part of your budget. If you have any questions about your tax liability, you should orient yourself with your Payroll Specialist or a Certified Public Accountant ”, advised the Coach in Personal Finance.
After having identified the different types of debts, Carrasquillo invites you that if you are interested in working on a debt reduction plan, commit to yourself to achieve this goal.
“You can start it by making a list of all the debts you currently have with the following information: creditor, balance, interest, payment date and minimum payment,” he mentioned.
After you can visualize the debts you currently have, you can choose two strategies to start reducing them debt snowball method (snowball debt method) or the debt avalanche method (debt avalanche method).
As he explained, debt snowball method It consists of ordering the debts in order from lowest to highest and making additional payments to the minor debt until it is paid off. Once you have canceled the smallest debt, you will continue to pay the next lower debt, the amount you paid on the first debt plus the stipulated payments, so on until you finally manage to pay off your debts.
“The other alternative will be debt avalanche method that it would be the opposite, that is, to carry out a debt reduction plan that you choose to pay the greater debt and make additional payments; once that debt is paid, it would be to pass that portion to the next debt, so on until all your debts are paid, ”he explained about the debt avalanche method.
Carrasquillo shared, in an interview with La Perla del Sur, that in his case, after a personal situation that he lived through, he had around $ 10,000 in debts and chose to reduce them through the method Snow ball. “Currently, I already have about 10% left to meet this goal in a two-year period,” he testified.
In addition to these mentioned methods to reduce your debts, Carrasquillo invites you to constantly monitor your budget, pay your debts on time and, if necessary, identify additional income to reduce them.
“It is important to reduce debt to have a better quality of life and provide financial security for your family. Remember that everyone’s progress is different and the important thing is that your financial goals are realistic and that you can set dates so that you can meet them, ”said the Personal Finance Coach.
If you want to know more advice on how to control and manage your personal finances you can look for the Coach on these topics, Viviana Carrasquillo, on the Instagram social network as: successfulfinancesbyvivi, write to the email [email protected] or access their website through the following link https://mailchi.mp/46fc245901a8/successfulfinancesbyvivi