Is 2022 a Year You Can Pay Off Your Debt? Here’s how to do it.
Being debt-free is a dream come true for most people. And it’s a dream you can fulfill in 2022 – depending on the amount of consumer debt (the debt you have from the purchase of things) that you have and your plans to repay. So is 2022 the year when you finally say goodbye to your consumer debt?
Here are some important questions to help you find out if you can be debt-free this year.
1. How much do you owe now
If you are trying to find out if you can be debt-free in 2022, you must first calculate your total debt. If you owe $20,000 and your annual income is $30,000, you are less likely to be able to repay your entire debt within one year.
2. What is your current payment plan?
Once you know how much you owe, think about how much you will pay each month from your credit balance. If you owe $10,000 and pay $500 a month, you will not be able to repay your debt for many years – mainly because part of these monthly payments go to interest instead of reducing your principal balance.
Some debts, such as personal loans, require a fixed monthly payment that allows you to repay the debt on a clear schedule. But with credit card debt, it can be difficult to know how long it will take to lose debt because your minimum payment can fluctuate depending on your current balance.
The good news is that there are many debt calculators that you can use online to estimate when you will be debt-free based on your monthly payments.
3. Can you refinance to make it easier to repay the debt?
For many people, refinancing an existing debt may be the best way to make payments cheaper and faster. And depending on your circumstances, it may still be possible to be debt-free in 2022 or earlier.
Refinancing involves taking out a new loan that you will use to repay one or more existing debts. You can use a personal loan and repay many credit cards and other loans. Or, you can transfer the balance on your credit card and transfer money from your credit card at a high rate to someone who offers 0% interest on the transferred balance for a limited time.
If you are considering refinancing, take a look at the repayment schedule of your new loan, as well as the amount you can spend on monthly payments to see if it is possible to borrow this year.
4. Can you adjust your budget to spend more money on debt payoff?
Finally, consider revising your budget to spend more money on debt. The more you can send to your creditors each month, the faster the principal will fall. If you can send creditors enough money every month, you may be debt-free in 2022.
By following these four steps, you will get a good idea of whether you can be one of those who can pay off your debt this year. And remember that even if you can’t repay your balance in full in 2022, refinancing or paying more for your debt can still help you get rid of that financial burden as soon as possible.