Debt is one of those lingering problems in life that will always find a way to sneak up to us. Even if you only have a bit of debt now, there’s a good chance that you might end up growing that debt to ludicrous amounts in the future due to interest rates or bad spending habits. While it can seem innocent at first and easy to deal with, it’s something that can spiral out of control if you’re not careful.
You also need to be concerned about the effects of debt. The emotional effects of debt can be debilitating and times and it could ruin your relationships or harm your mood and motivation. These are difficult problems to cope with, so it’s important that you seek out ways to say goodbye to debt forever.
In this post, we’re going to cover some of the most important tips that will help you ensure that you never have to experience those worrying feelings again.
What causes debt in the first place?
In order to beat debt, you need to understand it. A lot of people don’t realize why they get into debt in the first place, so let’s take a look at some of the most common reasons why debt occurs.
Relationship problems after being reliant or partially reliant on someone else
Did you know that relationship problems can cause debt? If you’re somewhat reliant on another person financially, there’s a good chance that you might find yourself facing a lot of debt if you end up splitting up due to your financial situation.
Poor money management due to overspending or failing to save
Overspending is one of the most common reasons for people falling into debt. Buying expensive items on a regular basis and taking out loans for the purpose of leisure can be extremely detrimental to your financial security. Make sure you cut down on overspending and try to avoid the feeling of missing out if you don’t have the same things as your friends and family members.
Low income or being unemployed for a long period of time
Little to no income means you’re going to be in a bad financial situation. If you already had debts that you were paying off, then they’re going to get a lot worse if you remain unemployed for a long period of time. If you’re currently a low-income individual or family, try and save as much as possible and only spend money on necessities for some time.
High costs of living in an area that you can’t afford.
If you’re living beyond your means then you’re going to find yourself in a difficult financial situation before you know it. Make sure you stop overspending and focus on the important things when using your money.
A failed business idea or project that you got no return on
It’s not uncommon for people to invest a lot of their own money into a project or business that ultimately fails. If you get little to no return from it, then it might plunge you into debt.
Lots of surprise expenses that you weren’t prepared for
Surprise expenses are troublesome to deal with since they’re almost impossible to plan ahead for. Even if you have a large pool of savings, there’s no guarantee that it’s going to keep you afloat if you experience large back-to-back expenses.
Losing your job due to uncontrollable circumstances
We discussed above that being unemployed can drag you into debt, but suddenly losing your job is perhaps the quickest way to find yourself in debt, especially if you lived life going from one paycheck to another.
Loans from the past such as student debt
The quickest way to find yourself in debt is to take a large loan for something such as a house, a car or even for education. However, these are often necessary to advance your life and career, so it’s one of the few acceptable forms of debt.
Can you avoid debt completely?
There are many little tricks and helps to help you avoid debt, but ultimately boils down to managing your money properly and avoiding any unnecessary expenses that you could live without. However, you might find yourself in debt due to circumstances that were completely out of your control. For example, some people might find themselves in debt because they’ve lost their job suddenly and without warning. Without any time to prepare, you might find yourself thrust into debt due to a decision that you had no control over.
So while it’s certainly possible to plan ahead for debt, there are times where you won’t be able to control your fate. You’ll end up falling into debt regardless due to circumstances outside of your control, so it’s a good idea to find ways to climb back up.
Acknowledging that you have a money problem
First, make sure you acknowledge that you have a money problem. This will help you get your finances under control so that you can start taking your financial situation more seriously. To start, let’s take a look at some fundamental ways to help you navigate around your debt.
Finding ways to help you get around your debt
- Start budgeting for your debt repayments. The most important tip we can offer is to start budgeting for your debt repayments. Add them to your regular expenses and make sure you’re looking ahead a few weeks at a time to ensure you always have money for paying off your debts while also living a comfortable and frugal lifestyle.
- Pay on time every month. If you miss payments, you’re going to be subject to more interest. Missed payments can also accumulate interest, ultimately forcing you to pay more money. As long as your payments are on time, you have nothing to worry about in regards to interest.
- Pay more than the minimum whenever possible. While it sounds obvious that paying more each month will ultimately clear your debt faster, it’s a good idea to remember just how effective it can be. By simply paying a little more off your debt each month, you’ll speed up the process which results in less interest.
- Try and decide what debts to pay off first. It’s a good idea to look at what debts you should pay off first in order to maximize the value of your repayments. If you have multiple debts, look for the ones with the biggest interest rates first. Pay these off first so you lose less money each money due to those interest payments.
- Dig into your emergency fund if necessary. Lastly, remember there’s no shame in using an emergency fund to pay off your debts. Debt can be considered an emergency, especially if you’re looking to prevent your interest from mounting up which ultimately costs you more money.
What if there’s no way for you to slowly overcome your debts?
In some situations, you might find that there’s no way for you to overcome your debts slowly and steadily. You might be having your wages garnished soon, you might not be making much money to pay off your debts in the first place, or you might be having a stressful time that is negatively affecting your health. In cases like these, you may want to look for a faster way to overcome your debts.
- Consider filing for bankruptcy. Bankruptcy is the go-to option for people that want to completely remove their debts. However, you might want to consider the aftermath of a claim. For instance, questions like "how long does bankruptcy stay on your credit report?” are fairly common. This is because there are different kinds of bankruptcy claims and some of them will leave a longer mark on your credit report.
- Speak to your bank or a lender about debt consolidation. Debt consolidation essentially means putting together all of your debts and squeezing them down into a single repayment plan. This helps you remove all of the interest rates and will make it easy for you to climb out of debt.
- Speak to the lender about debt settlement. You may also want to speak top your lender about debt settlement. This will help you remove a large portion of your debt outright.
As you can see, there are a number of different ways to overcome debt both slowly and with help from external services and lawyers. The ideal option for you will depend on your circumstances, but it’s a good idea to look out for different options.
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