DEBT: The Four-Letter Word That Can Change Your Life
While some debt is good, for instance having a mortgage or an auto loan, other forms, such as excessive credit card debt can work against you. Having too much debt can literally cripple you and cause you to feel stress and anguish. Let’s see if we can’t help you prevent that from happening.
Borrow Only What You Need
If you are currently behind on your bills, you can borrow a small amount of money from someone in your family or apply for a small personal loan from a source other than a traditional bank. This will allow you to at the very least bring your bills current. Be sure to figure repayment into your plans going forward.
Easy Access to Credit
Part of the problem with many people who acquire a lot of debt is how easy credit is for them to access. When you have a good credit score the world is your oyster, so to speak. Lenders are all too willing to offer credit. If you manage it responsibly it’s not a problem. However, not everyone has the willpower to say no to something they want, even if they really can’t afford it. For them, having access to credit is a way to buy something they otherwise would not be able to obtain. This is a very slippery slope that should be avoided at all cost.
Debt is something that creeps up on you slowly, almost without notice. One day your finances are fine and the next they are a mess. That’s because after you make so many purchases you begin to rack up debt in a variety of places and now you have multiple lenders sending bills for payments due. Consolidating these debts can help you overcome the problem and you’ll have less stress dealing with one bill each month.
Paying Much More than the Purchase Price
Unfortunately, lenders are not in the business of giving money out without making a profit. And, they count on you maintaining a balance so that interest accrues. If you are unable to pay off credit card balances each month you are accumulating interest and it will continue until you pay them off. This means that sale price item you bought six months ago is now no longer a bargain but nearly double in price. Be sure you consider how much you’ll ACTUALLY be paying if you can’t pay off your balances right away.
Having too much debt doesn’t just affect your wallet; it can affect your health too. When you fall behind on your bills you begin to worry about how you are going to get out of this financial mess. And, then the phone calls start, and they only elevate the situation. Spending time trying to figure out whether to pay a bill or buy food only makes you worry more.
Avoiding the fact that you are in over your head with your bills isn’t going to make the situation go away. Unfortunately, you have to face the ugly truth that you need to come up with a plan to get your finances in order.
How to Fix the Problem
A good starting place is to contact your creditors and explain to them your financial situation. They may not be able to help, however, some companies may be able to postpone a payment or temporarily reduce the interest rate. Either way, it’s worth a try to salvage your credit.
Creating a Budget
Now more than ever, you need to make a list of all your outstanding debt. This will allow you to see in black and white exactly what you owe and who you owe it to. Once you have this together you can take steps to begin to pay down your debt.
Getting a Handle on Your Spending
In most cases, people get into financial difficulties because they spend money they don’t have. If you change your spending habits, it will free up money that you can put towards your outstanding debt. You may have to forgo your stop for coffee on the way to work and dining out for a while but the rewards of lower payments and less stress will make your sacrifices worthwhile.
While some forms of debt are good, any form of debt can turn quickly into bad, if you are unable to pay it. Take just one step today to improve your situation and you’ll begin to see that there is light at the end of the tunnel.