If real estate credit often occupies a clearly identified place in the daily budget, other types of commitments – sometimes less visible – can tend to accumulate: car loan, split payment, consumer credit, etc.
If you only had to remember 2 pieces of information:
👉 Step 1: list all your repayments for a better monthly view of all your financial commitments.
👉 Step 2: Ask your bank advisor about combining all your credits into one if your situation allows it.
#1 Take stock of your debts and prioritize those to repay
The first step is to take a very precise inventory of your financial commitments. Nearly half of French people (40%) currently have consumer credit according to a survey conducted with CSA Research. Consider integrating payment facilities into your inventory (payment in three or four installments, etc.). According to the aforementioned survey, the amount borrowed amounts to 719 euros!
After having made a list of your debts, you can establish your repayment table by indicating:
-
In column, the next twelve months
-
Online, the list of the amount to be repaid each month.
This will give you a clear picture of how much you owe your creditors each month. If you notice that this amount is particularly large in certain months, you can identify the debts to be repaid as a priority.
#2 Monitor your debt ratio
A very simple way to know if your debt is excessive or not is to calculate your debt ratio. The debt ratio corresponds to the ratio between the amount of your repayments (consumer loan, property loan, etc.), on the one hand, and your monthly net income, on the other hand.
As a general rule, it is estimated that the maximum recommended debt ratio is around 35%.
#3 Consider consolidating or repurchasing credits
Consolidating credits is often an interesting way to reduce your monthly payments. Concretely, you combine all your credits (consumer, housing, etc.) and, where applicable, your other debts into a single loan which is bought back by a credit institution. The financial institution offers you a lower monthly payment in order to relieve your monthly budget. In return, your repayment period lengthens, resulting in an increase in the overall cost of credit.
#4 Save money every day
To free up funds to repay your debts, it may be appropriate to reduce certain expenses. Subscriptions (streaming platforms, duplicate insurance, etc.) and leisure activities can be among the items to be optimized.
