Debt is a sinkhole you do not want to stick around in for too long. The more debt you accumulate, the faster you sink financially. Interest rates can spread like wildfire, consuming your supposed savings and retirement funds. Fortunately, just as you managed to get yourself in debt, you can also get yourself out. Here are 10 ways on how you can gradually recover from the seemingly inescapable grip of toxic debt.
It’s pointless to put out the surrounding flames if you don’t know where the source of the fire is coming from. Form the habit of self-evaluating your finances in an objective and unbiased manner. Currently, US consumers have a collective credit card debt amounting to $946 billion. When contrasted with the most recent US population numbers, this implies that the average US consumer has almost $4,000 worth of credit card debt. Evaluate your credit card/s as a starting point for identifying your financial situation.
Check Your Budget
After sorting out debt, the next thing you should look at is your monthly budget. Write your net income for each month and deduce the expenses incurred for the same month. Net income means you’ve already subtracted the taxes and any monthly payments you may be allocating on a retirement plan.
Make a Short-Term and Long-Term Plan
The short-term plan will guide your daily actions, from deciding what to purchase at the store to which payment plans to choose from. Your long-term plan will constitute decade’s worth of financial needs and expectations.
Pay Debt Off Immediately
Start with high interest rate loans, such as payday loans with 100 percent interest rate accumulated over a fairly short period of time. Paying off debt should supersede any investments, regardless of how wise the investment sounds.
Negotiate Your Repayment Terms
Keep in mind that it’s always an option to try and negotiate your debts initial repayment terms. Contact your creditors to see if they can adjust the terms on your outstanding loan and make it easier for you to repay the debt. In some cases, negotiating can reduce your interest rates or the settlement amount.
Improve Your Career
Loss of employment or low income may be precursors to a financially gloomy future. While improving your career may require a larger investment of time and money, which does not really offer immediate debt relief, it is something you should consider moving forward to.
Get Professional Assistance
Pride will only dig you a deeper hole. Professional services from the best credit repair companies will help you negotiate lower interest rates with your creditors, give you invaluable advice, and restructure your budget plan to maximize savings.
Beware of Scams
People who are knee in debt are usually panicky and are unable to think straight. This makes them easy targets to scams and fraudsters. Vet every professional service and debt relief program you encounter when trying to fix your debt.
Being in an accident and injuring yourself can put you out of commission, which further worsens your debt situation. Protect yourself by hydrating and eating the right foods, exercising, and taking vitamin supplements and medication when necessary. These are all cheaper, not to mention more organic, alternatives to getting a surgery and being out of work for months.
Protect Your Belongings
Protecting your belongings is equally important as protecting yourself. Your home, vehicle, and other possessions are assets that you need to function normally on a daily basis. Lose any one or all of these assets and you’ll be unable to work on repairing the debt.
Debt is never erasable overnight. You’ll have to wash off the stain over months of planning and hard work. Use the 10 tips aforementioned to expedite the process and to cultivate habits that will carry you to financial success.
By: Kevin Faber