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Debt is extremely common in the US and already in 2022 with a huge $841 billion dollars already built up. Keeping on top of debt repayments can be stressful and to help Capital Bean has put together a handy guide to debt repayments. We hope that this will help you mentally and reduce your stress. When repaying debt you can use one or many of the techniques we’ve listed below.


Always Communicate With Your Lender

If you’re struggling to repay anything, whether it be a mortgage or payday loan- a first step should always be communication with your lender. If they know if you’re going to miss a repayment or not be able to pay the full amount this month, they might be able to help.

In some cases, they even change the terms of a loan to reduce the monthly outgoings. This is called a debt management plan. In some cases, they’ll even freeze your repayments while you get back on top of your finances.

It’s rare, but it does happen – in some cases you can negotiate a settlement with your lender. Sometimes they’ll agree to a percentage repayment of what you owe them if they know you’re not going to be able to repay the full amount.


Organization Is Key

Where many people struggle is not not having the full picture of how much they owe. Open up a budgeting spreadsheet or get a piece of paper and list out the total amount of money that you owe and the interest rate.

This will give you a good idea of what you need to do to get debt free.

After you do this, you could look at the avalanche or snowball method to repayment. Either way, it will give you an accurate idea of where you are and what you need to do.


The worst thing you can do is to ignore debt repayments. You should get an accurate picture of what you owe and create a plan to repay it.

Reduce Your Spending

It might seem obvious, but one of the easiest ways to repay your debt is to have more money available to do it. A good place to start is to reduce the amount of money you’re spending each month.

If you can cut down on luxury or unnecessary purchases, you’ll have more money to repay debt.

On your day-to-day spending, look to see if there are cheaper alternatives or things that you can go out without this month. Every little helps. You can also look at ways to reduce household bills and expenses or even reduce the amount of money you’re paying on luxuries.

Make sure the money you’re saving goes to paying off debt.


Create An Emergency Cash Buffer

This is a good habit to get into, regardless of whether you’re repaying debt or not. Every time you get a monthly paycheck take some of it and put it into a separate account.

You should aim to start by having a cash buffer of $500 for emergencies or medical bills. If you do need to repay some debt using this money you can which will save you money in the long run.

Or or you could pick up some extra work to build this cash buffer. You could also look at paying for things in cash and only buying things that you have the money to purchase outright.


Budgeting Is King

After you’ve listed out all your debts, you could then take this one step further and create a budget. There are many apps or spreadsheets to do this which can cut down on what seems like a very tedious process. It’s easy to link budgeting apps to your bank account to get you a good idea of how much you’re spending.

The 50/ 30/ 20 rule for budgeting is a good place to start. You can read more about it in our guide. 50% of your income goes to essentials. 30% of your income goes to non-essentials. 20% goes to savings or repaying debt.

If you are in a relationship, make sure you communicate when budgeting so that you’re both on the same page


Get Support Where You Can

If you’re still struggling to repay debt then talk to a debt relief NGO. There are credit counselors, bankrupt attorneys, and legal aid centers that can help talk through your financial challenges.

Some offer face-to-face consultations and some are online. Find one that works for you. Talking to someone about your financial situation is a good first step to using the burden.

Before you get into further financial trouble, it’s always good to talk to someone. Do this before taking out more debt because it could be a downward spiral.

Richard Allan

Richard Allan

Richard Allan is the founder of Capital Bean and a passionate writer about personal finance, budgeting and how to save money at home and work.

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