Debt doesn’t make excuses, and it’s not partial to specific age groups, ethnicities or sexes. Debt is the great equalizer, and at some point in our lives, most of us will experience at least some sort of debt crisis. While moderate issues with debt are becoming more and more normal, those with severe debt issues can often feel as if they’re on an island, isolated, and with nowhere to go for help. While this can be a crippling feeling, with smart planning and money management, few debt issues are so severe that there’s no coming back from them without the help of bankruptcy.
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Here are a few simple tips for anyone that has ever been dealt with the stress and anxiety that come with mounting piles of bills, collection calls and seemingly no way out.
First of all, breathe and relax knowing that this too shall pass. Debt isn’t often a permanent problem, it just takes patience, discipline and a solid plan.
Create a Budget
Budgeting is an overlooked skill that isn’t often taught in school, yet all adults should know how to prepare a basic budget. There are a few rules of thumb when dealing with a budget, and one of those is to budget 30-percent or less of your total income to housing-related expenses such as your mortgage, utilities, and cable or satellite. Another is that you should be putting aside at least 10-percent of your take home pay into a savings account or into a 401k or similar investment account. Of course, these are just rules of thumb, and if you already have a mortgage that costs you 50-percent of your take home pay, this isn’t going to do you a ton of good, but you can certainly look for categories in which you can begin to save.
Eliminate Unnecessary Expenses
First you need to cut all non-essential items. Consider switching to a cheaper cell phone plan (or canceling it entirely), cancel cable, the lawn service, and all other items that fall into the “wants” but not “needs” category. Stop eating out, and instead start learning how to shop and prepare cheap and delicious meals at home. Make your coffee at home or in the office rather than stopping at Starbucks each morning for that $4 latte. In general, you’re just looking for ways in which you can save a few bucks here or there, which can often save you hundreds of dollars per month.
Consider Additional Ways to Earn
Now it’s time to start looking into ways in which you can pay down your debt faster. It’s not necessary to pay all of it off at once, but high interest credit cards, and the like are often costing you 15-percent or more in interest, so it’s imperative that we remove the high interest debt first. After cutting expenses, the next thing that most will look into is finding additional ways to earn, whether it be by asking for a raise, finding a second job, or just earning some spare cash with a side job that you work here and there. Extra money means quicker debt resolution.
Look Into Debt Relief or Consolidation
This should be a last resort, as there are far too many horror stories of companies that are very expensive, but don’t offer much that you can’t do yourself. Ask for referrals, check for internet reviews, and if you absolutely must take this step, ensure that the company you choose has a solid reputation and doesn’t make “too good to be true” promises. While there are many legitimate companies out there that can help, there are just as many that have rather dodgy reputations. Do your homework, and choose carefully. If you are able to find one, they can often remove interest payments, late fees, and even consolidate all of your bills into one monthly payment in order to get everyone paid back as quickly as possible.
And if all else fails…
Consult an Attorney
If you are carrying large amounts of debt or have a change in income that prohibits you from paying your debt, the last resort is often bankruptcy. Before filing, it’s worthwhile to spend some time learning about the different types of bankruptcy filings. After learning about chatper 7 bankruptcy, many people come to the conclusion that this offers the fastest relief and the fresh start they are looking for. Remember, if you must file for bankruptcy, it’s a process best left to a legal professional, so do your homework.
Debt can be a scary thing, and most of us know all to well the feelings of stress and anxiety that often go along with it. Taking care of your debt isn’t easy, but with careful planning, discipline and execution of your strategy, many thousands of people begin crawling out of the hole that they’ve created for themselves each year. You can be one of them. Good luck.
Debt is such a scary thing! I’ve been really careful about living within a budget for most of my life, and I can tell you that it’s really helped. Not all my friends have been so careful, however, and one of them is now paying for it. She’s pretty overwhelmed, and I think I’ll pass along your advice to consult an attorney. Consulting with a lawyer doesn’t necessarily mean she has to file bankruptcy, but I think it’s important she know what her options are at this point.
Oh hey, these tips sure would be helpful to show to my sister in-law. Right now she is falling into hard times of financial debt which worries the whole family. So far she has hired a bankruptcy attorney to help her lower down loans and debts that she still owes. My wife and I have also helped out with getting her to create a budget that she can track her expenses.
Finances are always a stresser, at least they are for me. The suggestion you give, however, to eliminate any unnecessary expenses was a really helpful insight! Additionally, you talk about how prioritizing your things in a “wants” and “needs” list can help you to visualize all of the things you are paying for and help you to see what is necessary and what is not. I will definitely do this, prioritize my costs, and eliminate anything that I shouldn’t have to pay for. Thank you for sharing!
I have been trying to figure out some good ways to deal with my debt, but it seems to continue to grow. I would really like to try harder to be on a budget, but honestly right now I am not making enough money to do really anything. I would love to find new ways to earn money, as you suggest, but I don’t think I have time for a second job. At this point, it might be best for me to talk to a good attorney, because I think that bankruptcy may be the best option at this point. Thanks for the great suggestions.
When in bankruptcy, I like the idea of finding ways to make money. If you need to pay down debt, you need to find some ways to earn money. Recovering from bankruptcy isn’t about eliminating debt, it is about acquiring income to cover having nothing.
Trying to pay off debt is something that can be very dicey at times. While we can argue on so many different ways of getting rid of our debts, the fact of the matter that it all depends on the circumstances of the individual.
My way of doing it is to pay the high interest rate credit cards and and start cutting them out and throw them once paid. Then I go to the next until all of them get paid which may take several years. just be patient and be consistent in your financial road map and your personal finance will be fine.Thank you for sharing!
Debt is so stressful. I agree with consulting an attorney, they can help you through difficult times with professional advice. My sister is in a serious financial crisis and is currently looking for a good attorney.
Yes I must say this is best suggestion that read from last several months. But you know what there different types of situation or you can say problem people face in debt loan. The best part of your post is consult with attorney.
These are all really great tips! It’s all the small expenses that really add up. Budgeting can really help you see where money is going.
Wow, this is some really good information! Definitely some great advice and tips to keep in mind. Thanks for sharing!
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My uncle is in too much debt right now, and we’re looking for ways on how we can help him have a fresh start. You mentioned in this article that consulting a bankruptcy attorney is a simple way of getting debt relief. I’ll share this with him, together with some other tips you provided, so as to lessen his stress of dealing with debt. Thanks!
When your personal debt gets into an uncontrollable avalanche, it is easy to actually ignore it. That’s why when it happens over and over again, they have to fix it once and for all and make sure to create a budget that actually works.
Thanks for providing us these details about bankruptcy. This will really very helpful for us. If anyone is searching for any expert bankruptcy attorney in Forth Worth or in Texas area can contact Sherman Law Firm.