Getting Out of Control Debt to a Manageable Level
Have you accumulated so much debt that it’s starting to take control of your life? Though everyone has some form of debt, when it starts to impact all areas of your life, it’s time to make a change. Too much debt can ruin your credit, deplete your budget, and minimize your ability to do things like buying a house, car, or get certain jobs. Not to mention, it can result in a lot of stress which leads to a host of medical issues. If you’re up to your eyeballs in debt, the best thing you can do is start taking steps towards reducing it.
There are a lot of reasons that people fall behind on their financial obligations. A divorce or separation, loss of a loved one, loss of income, increase in the cost of living and more can impact a household income, making affording everyday expenses and their debts impossible to afford.
However, one of the most common reasons people fall behind on bills is because they’re living beyond their means. If your income cannot comfortably cover all of your out of pocket expenses, downsizing may be the only way to get your debt to a manageable level. Here are some ways to downsize and save:
Move – If your housing costs account for more than 30% of your annual household income, it may be necessary for you to move. If you live in a house, perhaps renting or living in an apartment would suffice. If you have family members who have room to spare, you could also consider moving in with them to put all of your income towards paying down debts. Getting quotes from service providers like Allied Movers and scheduling for an off-peak moving time can help you reduce moving costs.
Get another car – Car payments are another expense that can keep individuals in debt longer than necessary. If your car payments have gotten the best of your budget you should get another car. You can try trading it into the dealership for something with lower payments. If you only have a little left to go on your car loan, you may be able to sell it and have enough to pay off the balance and invest in a used car you can pay cash in full for.
Debt Repayment Strategies
Many consumers make the mistake of ignoring their debts. This can only make matters worse and increases the amount you have to repay. To get a handle on out of control debt, you need to come up with a plan to repay the balances you owe. Though the grand total may seem intimidating and impossible to complete, but can only multiply the longer you put it off. Below are some debt repayment options to consider:
Snowball Repayment – A tried and true method for getting debt under control is the snowball repayment method. This is where you pay your debts off from smallest to largest. As you pay off each small debt apply that money to the larger ones until you’ve completely paid off your debts. The idea here is that the gratification you feel for paying off smaller debts will encourage you to keep going.
Renegotiate or Settle – Rather than ignoring the repeated phone calls you receive from debt collectors it is best to pick up. Creditors understand that life happens and in many cases, are willing to work with you to get the account back in good standing. Try renegotiating payment amounts or terms to match your budget. You might also consider asking for a settlement amount which can eliminate things like late fees and collection costs.
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