About 71 million Brazilians are in debt, according to data from Serasa
the recovery of financial stability it requires planning, commitment and a change in attitude towards finances. While not a quick process, with some pointers it may be possible to end the cycle of debt.
According to Serasa’s latest delinquency and debt rescheduling map, there are 71.9 million households in debt in Brazilwhich represents 44.9% of families.
According to Valéria Vanessa Eduardo, master’s professor of accounting sciences at Anhanguera, indebtedness generally occurs when people maintain a pattern of consumption and spending that exceeds their financial capabilities. “Obviously there are exceptions such as unexpected expenses with illness, family, etc., but in all cases, taking care of bills and honoring commitments is fundamental,” she points out.
The ‘bad guys’ of debt
You credit cards are identified as the main ‘bad guys’ of household debt, with average annual rates of around 201% and average card interest rotating (charged by customers who do not pay their entire invoice) reaching 448% per year.
These interests affect the pockets of Brazilians, leading to defaults of more than 50% among those who resort to installment payments. “Importantly, 75% of Brazilians share your purchases, and the credit card has become an outlet for satisfying basic needs. However, delinquencies above 50% show how high interest rates and inflation significantly impact household balance sheets,” she adds.
To avoid debt and achieve financial stability by the end of the year, Valéria suggests some simple strategies, such as list all debts and negotiate with creditors to find viable solutions, take advantage of trade shows offering discounts of up to 99% to renegotiate debts and use the 13th salary to amortize these outstanding debts.
However, he cautions that it is crucial to only negotiate deals that are compatible with each person’s financial reality, to avoid breaking the debt agreement, missing out on the discounts offered and facing even higher interest rates.
Furthermore, the teacher emphasizes the importance of self-knowledge to avoid new debts, recommending the understanding of motivations behind purchases and avoid compulsive spending. To balance the income, the expert suggests allocate 50% for essential expensessuch as rent, food, and transportation; 30% for lifestyle, including activities such as the gym and leisure; AND 20% for loan or investment payments.
It also emphasizes the importance of avoid indiscriminate use of the credit card and encourages setting clear goals, such as getting out of debt, buying a property, or going on a trip, to motivate the family to be more financially savvy.
“It is critical that debtors only close deals if conditions are compatible with their financial reality. Breaking the debit agreement can lead to the loss of the discounts offered, the cancellation of the renegotiation and the resumption of interest ”, she warns.
Check out tips for getting out of debt
- Maintain a spreadsheet for tracking expenses, including monthly fixed expenses and debit card expenses;
- Make a list before going to the supermarket, setting a fixed date for monthly purchases and researching prices;
- Avoid having too many credit cards, favoring payment in cash and, if necessary, choosing the number of interest-free installments;
- Opt for a cheaper car and carry out regular inspections to avoid overspending with repairs;
- Plan outings with an expected average cost and look for free leisure options;
- Adopt conscious consumption habits to save food, water and energy;
- When renewing the lease, propose a renegotiation to the landlord and explain the situation;
- Arrange seasonal payments for the first quarter of the year, for example IPTU, IPVA AND tuitionand, if possible, use the 13th salary to make reservations.
Source: Terra
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