Being in debt isn’t necessarily a bad thing per se. After all, debt allows us to get a mortgage and live in a house that we can’t afford to buy outright. It means we can get a loan to buy a nicer car. And it also gives us the opportunity to speculate and create capital for a business idea. Clearly, some forms of debt are good for you, give you opportunities to lead a happier life. Bad debts, however, are a different kettle of fish.
When you have bad debts, it can feel like you are very close to the edge. Your creditors will start to call things in, you will be threatened with legal action, and you will experience the scary situation of debt collectors calling you up on a regular basis – maybe even visiting your home. It can be exhausting, stressful, and it can often feel like there is no way out. While you can refinance your student loans, not all loans or debt come with that potential and you can end up completely overwhelmed and at your wit’s end.
However, with some savvy thinking and clever tactics, it’s possible to address you bad debt situation and start the process of becoming debt free. And today, we’re going to take a look at a few of the things you can do to start solving your problem. If you have bad debt problems, try some of these out – and get started sooner, rather than later.
If you have a good credit score, one of the first things you should do is consider switching your current debts to an alternative with better terms. The classic example is a 0% balance transfer on a credit card. Using this tool can be incredibly helpful, as you can stop paying interest for a set period, and really focus on paying off your debt. When you are paying anything from 15-20 percent on a card, just think how much money you will save, and how much quicker you will be able to pay off your debt.
Talk to your creditors
There are no guarantees that talking to a creditor will ease your burden – but it’s worth a shot. Explaining your situation might result in your creditors stopping interest charges, giving you some breathing space, and it will also help you feel like you are keeping the wolves from the door. Always take your debts seriously and never ignore them. You will find that most creditors are reasonable as long as you remain in contact with them, and start making repayments on a regular basis.
Understand your rights
Being in debt is not a crime, and despite the efforts of many debt collectors, it’s always important that you remember this. You have rights when it comes to debt, and anyone that is chasing you for money has to act within a particular set of rules. https://www.ftc.gov/ has some great resources on debt law, which is worth checking out – it covers everything from harassment and abuse through to unfair practices and legal actions. Don’t forget, the debt collection industry is heavily regulated, and if you feel that a particular agency is stepping over the line, you should never be afraid of reporting them.
Create a budget
It’s important to have an idea of what you have available to pay off your debts. Make a list of all your incomings and regular outgoings, and give yourself an amount each month that you can use to make repayments. You’ll need to be pretty strict with yourself, of course, and also go through each of your monthly payments and consider whether they are worth it – which we are going to take a look at next.
People often pay for unnecessary things like subscriptions that are never used, don’t provide any value, and are wasting money. All of these little things can add up to a considerable amount of money over the course of the year and can make a serious contribution for dealing with your bad debt problems. Magazine subs, gym membership, Spotify, and Netflix – even your cable TV could probably be minimized to help free up cash to focus on paying off bad debts.
Find better deals
The next step is to look at your payments and try and find better, more cost-efficient options. Home insurance, utility bills, and anything else that you spend on regularly can all be swapped for a cheaper alternative. Learn to negotiate and haggle, too – there is always a good deal to strike no matter who you are dealing with. Any money you save – which could potentially end up being a significant amount – can be directed towards your debt repayments and help you shorten the time it takes to pay off completely.
Earn more money
There are a million and one ways to make a little extra money, all of which can go towards paying off debt, according to https://fortunateinvestor.com/. Start by decluttering your house, and selling items you don’t need on Craigslist, eBay, or even at a yard sale. You can get paid for doing surveys online, too – try Ipsos Panel and Opinion Outpost and see what you can earn just by answering questions about your favorite TV shows. Finally, why not look for a second job? Perhaps you could do some shifts at your local bar, or offer some gardening services to your local community on the weekends? You will be surprised at how quickly you can earn some real money, all of which can help you pay off your debts far quicker than you can at this moment in time.
If you aren’t already using coupons, now might be a good time to start. Couponing is often mocked by some, and while it’s true that some people take it a little too seriously, it’s an excellent way to save an enormous amount of money. As long as you only use coupons for products you actually need, you’ll find that those savings start to stack up pretty quickly.
Change your mindset
Having bad debts can have a severe impact on your psychological well being. When you are under such a lot of stress, you’ll find that you start making bad decisions. Therefore, it’s vital that you are able to retain a little self-control and also try to change your mindset. Start valuing your money, and avoid making rash buying decisions – which probably got you into trouble in the first place. Avoid shopping when you are feeling down, too – psychologists believe that when we feel down, we often make up for it by buying expensive – and sometimes unnecessary – items. One way of making yourself stop and think is to stop paying for things by card. If you only use cash, you get a much stronger sense of what you are spending. It’s typical not to think twice to pay for a $200 product on a card, but when you actually have the money in your hands and have to count it out, it gives you a real sense of perspective.
Order groceries online
We all need to eat, but those trips to the grocery store are costing you a lot more than you might think. Even when we go in armed with a specific list of items, we will often come home with a huge array of extra purchases and impulse buys. There’s a simple solution to this matter of overspending – order your groceries online. Even though there is usually a delivery charge, you will find you save a considerable chunk of money, because you are only buying exactly what you need.
As you can see, there are plenty of things you can do when you are in bad debt. Give some of them a try, put everything extra you save or earn into paying back your creditors, and you will be surprised at how quickly you get back on your feet.