The feeling of being in debt can be very worrisome, and you may not always know where to turn. However, by taking the time to do some research into different debt strategies, you will be able to put your mind at ease and take steps back into the black.
The first strategy you should try is transferring the balance from existing cards onto a new card with 0% balance transfers and 0% interest. Some of the credit cards will allow you to benefit from these two advantages from up to 12 months, meaning that you will be able to tackle the debts you have without having to worry about the added interest that you would have received on top. However, if you have missed payments, this may be difficult to achieve because of the damage that would have been inflicted on your credit score.
You should also consider ringing your lender and explaining the circumstances surrounding your debt, such as unemployment or an unexpected emergency. If you are struggling to meet your bills, many lenders will be able to draw up an alternative repayment plan for you to adhere to. You should also consider that this scheme may come at an additional cost to you, because some credit card providers penalize borrowers who go through this process. Nonetheless, it is still important for you to go through this process.
Another strategy that works is sitting down and getting your finances in order by looking at your income each month and your expenditure. Usually, those of us in debt will find that we are spending more than we earn, and in this instance, it is important to review what buy every month – cutting out the things that we no longer require. Some of these things may include branded goods from a grocery store when there are cheaper alternatives, gym memberships, and magazine subscriptions that could be cancelled. At this point, you need to cut out some of the luxuries you enjoy to ensure that you are back in financial stability – preventing the chance of your assets being placed at risk.
You may contemplate bankruptcy plans, such as filing under Chapter 7 bankruptcy. Usually, it is important to enlist the support of a lawyer who will guide you through the process, instructing you on the assets that you will be able to keep once the bankruptcy has been filed. The rest will usually be liquidated, with the funds from the sale of your possessions being used to pay off the people you owe. After this, you will be in a position to start again.
Not only should you consider reviewing what you spend, but you should take the time to critique how you spend as well. If you are continuing to use a credit card in your situation, you should reconsider – especially if the interest rate is higher than average. Instead, you should use physical cash, or a debit card where the cost of the item you are purchasing would be taken from your bank account. After all, you don’t want to add to the money you owe unnecessarily, do you?
This is a difficult time, and thankfully, there are charities that will be able to help you and support you through help and impartial advice.
This is a guest post from Connor Stephens, freelance writer from the UK. Connor lives in London and provides global insight in personal finance and financial management.
- 3 Debt Reduction Plans that Work (debt-consolidation-2u.com)
- Is transforming debt into wealth easy? (2011tax.org)