Paying off debt is a hot topic, but for many, it is one that gets put off as it is “just not the right time yet”.
However, debt repayment is critical to financial freedom and, let’s face it, less stress – so you might want to start thinking about paying off what you owe sooner rather than later.
In this guide, we are exploring the 5 key signs that show you need to start repaying debts, while also answering some common questions about debt management. Ready? Let’s see if it is the right time for you.
When Should You Pay Off Debts?
There is no one-size-fits-all answer to this question. However, the best answer is usually “as soon as possible”.
Whether it is a loan or a credit card, you should always try to repay short-term borrowing options as soon as possible. Otherwise, you might have to pay some pricey interest charges.
Many also ask, “How long should you leave debts?” and again, the answer is for as little time as possible. Prolonging payments can lead to high interest, late fees and damage your credit score.
So, it is in your best interest to be prompt with payments!
5 Signs You Should Start Making Debt Repayments
Is it your time to start debt management? Here are five sure-fire signs that you need to start making payments.
1. You Are Making Late Payments
Many believe late payments aren't a big issue if they are not missed entirely. However, overdue payments can lead to fees and make future borrowing harder or more expensive.
If you are paying late, assess if it is due to forgetfulness or debt affordability. If it is the first, it is a sign you must make a better plan and start paying on time!
2. Your Credit Score Dropped
Late or missed payments will almost certainly affect your credit score, which can, in turn, affect your borrowing ability. A lower credit score can impact your financial future, so you must not delay and take action now before it drops any lower.
3. Minimum Payments Are Increasing
Your minimum payments increase if the interest rate on your credit card rises or your overall balance grows. Unfortunately, this results in higher monthly interest payments and makes it harder to pay off debt, prolonging the whole experience.
If you notice this happening, making bigger repayments can stop the cycle and help you get back on track.
4. You Are Motivated To Get Started
Paying off debt quickly goes beyond just managing money and putting off financial stress!
It is also about unlocking future opportunities. So, if you notice that you are motivated to save for major goals, like purchasing a home or planning for retirement, it is a good indicator that you are prepared to take bold action towards clearing your debt.
5. You Are Feeling Overwhelmed
Positive emotions are not the only ones to take note of.
Feeling overwhelmed by mounting debt can cause significant stress, impacting your mental and emotional well-being – and that is likely why you’ve clicked on this article!
The constant pressure of unpaid bills and loans and the resulting overall financial instability can lead to anxiety and worsen your health.
So, for your mind and body, it is time to make a debt management and repayment plan as soon as possible.
Want to learn more about paying off debt and personal finances? Jump to the Cash ASAP blog now for expert guides and advice.
