Face Your Debt, They Won’t Go
A record number of people struggling under a huge debt burden, and when things start to become unmanaged, it’s easy to try and ignore the situation in vain hoping that the problem will disappear. Of course, we all know deep down that our debt situation must be handled, however stressful and frightening that prospect is. So how can you deal with your debt?
The first thing to do is pay attention to your financial situation. How much money can you spend to pay off debt? Is there a way to increase your income? Is there a way to reduce your expenses? By putting together a budget plan that is reasonable and honest all at least know the extent of your problem, and that all take the first step to regain control.
Next, you need to look at your payments and expenses, and identify which are the most important. Your mortgage or rent must always be your number one priority, followed closely by important bills such as electricity and water.
Make sure your budget plan will cover these important things first, then add the costs of daily necessities such as food. After you do this, you must have a total number of your most important expenses. Subtracting this figure from your total income will give you the amount that you must now devote to reduce your debt.
It’s important to cover the minimum payments on debt as much as possible, because the fees for late payments or missed payments will only push you deeper into the red. If you find that you do not have enough reserve funds to meet all your minimum needs, contact your creditors and politely explain that you are experiencing financial difficulties and need help. This step can be scary, but remember that the person you are talking to will only be a company employee and will not respond to the situation personally.
Most creditors will be happy to come to some arrangements with you to reduce your monthly payments, either by restructuring your debt over a longer payment term, or switching to interest-only payments for a while.
If after trying to renegotiate your debt, you feel that it is still not enough, maybe it’s time to reconsider a consolidated loan. Debt consolidation works by taking one large loan to pay off all your smaller and more expensive debts such as credit cards and the like. By getting a loan with a lower interest rate and spreading your payments in the long run, you can reduce your monthly bills substantially.
Unfortunately there are drawbacks to consolidation loans too. You will go deeper into debt with another loan, and may end up paying more interest costs in the long run. You might also find it difficult to get a consolidated loan unless you own your own home or have other assets to secure the loan, and homeowners will risk losing their home in the future if they cannot continue payments. For this reason, it is best to think carefully before choosing a consolidation option.
It doesn’t matter whether you choose a consolidated loan or not, it’s important to remember that debt affects a lot of people and there’s no need to be embarrassed. The only way out of your debt problem is to face it, and try to regain control of your finances.