Deep in debt?
It’s so easy to ignore the situation and hope it will go away. You might think that you’ll skip a payment here and there and get through it. But this is very risky. Start by acknowledging that you have a serious debt problem.
Then list out all your debts. Prioritise by interest rate, not by amount. A credit card with 20% interest goes way above a $100,000 housing loan on 8% interest.
Then call your credit card company to negotiate for a lower interest rate. If this doesn’t work, tell them you’re looking to move to another company. Rather than losing you as a customer, they would give you a better rate. But, being the prudent customer you are, you will look around for an alternative credit card provider who can provide you with a better rate. Ask for a 0% interest rate for 12 months on your balance transfer. Remember, this is business, not a class on friendship. Every dollar counts.
But before you switch your credit card debt to another card, consider going to your housing loan provider and asking them if they cam merge your current debts to your housing loan. This may be done via another round of financing. Worst case scenario, take out a personal loan with them. Since you already have a housing loan with them, ask for a lower interest rate on the personal loan. Don’t be shy to ask. You have nothing to lose. And they will want you, trust me on this. It is much better to consolidate all your debts into a low interest Personal Loan than into a balance transfer credit card unless you’re sure you can clear the debt on the balance transfer credit card within the time frame.
Consider some financial counselling, if all else fails. It’s good to get some expert help. There are government agencies providing help without the need for any payments. Use these services. Don’t be shy or angry. It’s better to bite the bullet now than to sink deeper into debt. Schools don’t teach use financial planning, so its no surprise that most of us fail in it.
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