When you’re dealing with a short-term financial setback like a high energy bill, home, or car repair, you have plenty of options. You can charge the expense to your credit card, borrow the money from loved ones, dip it into your savings, or take out a personal loan and repay the balance over time. However, what do you do when the financial setback you’re experiencing is long-term?
If you get sick, injured, or lose your job, for instance, your finances can suffer for months, if not years. In these circumstances, people are quick to borrow money, use their credit cards, or even skip bills as a means of survival, but it’s only a temporary fix. Now you’re back on your feet, but you’re left with a mountain of debt to resolve and no idea where to turn. Fortunately, you too have options. Continue reading to learn more.
How Much Debt Do You Have?
It might be scary to think about, but you must know how much debt you have to pay off or reduce if you’re going to regain control of your finances. Gather all your statements, bills, and credit reports to calculate your outstanding balance.
How Much Can You Dedicate to Debt Repayment?
Next, you need to determine how much you can afford to put towards paying these debts down. Calculate your household income, subtract necessary expenses, and write down the remaining balance. If you don’t have any income leftover or can’t afford everyday costs, you may need to consider downsizing, reducing your spending, increasing your income, or even filing bankruptcy.
Which Debts Are Most Significant?
While the goal is to pay off or reduce all debts, some take priority over others. High-interest debts, collection accounts, and debts that have resulted in wage garnishment or property possession should be at the top of the list. Then, add the remaining debts in order from most to least expensive.
Which Creditors Offer Assistance?
There’s no denying that contacting creditors can be intimidating. You’re not sure what their response will be to your financial hardship. Be that as it may, ignoring them only makes matters worse. So, using the list of debts you created, reach out to the creditor, service provider, or collection agency to inquire about financial assistance.
Believe it or not, these companies are often willing to provide assistance as a means of getting the debt paid off sooner. You may be able to get interest rates lowered, late fees removed, or an affordable payment arrangement. When the creditor explains your options, don’t agree to something more than you can afford, or you’ll end up right back in the hole with fewer resolutions.
What Other Debt Management Resources Are Available?
If you can’t afford the options offered by creditors or you simply want to regain control of your debt faster, there are other resources you can use to manage your finances. Take debt consolidation loans, for instance. If you have a large amount of debt weighing on you, using another loan can prove beneficial. Debt consolidation loans are essentially a means of restructuring your debt.
Companies like Strategic Consulting offer consumers low-interest loans to pay off or reduce debts. You lump all your debts into one loan with one affordable monthly payment. It saves you money on interest, late fees, and other associated costs. A debt consolidation loan is also a lot easier to manage than multiple accounts. As long as you keep up with the payments, you’ll be debt-free in just a few years.
No one can predict when life will throw you off course for several weeks, months, or years. When it does, it creates a significant financial hardship that can be difficult to recover from. While there may be nothing you can do in the midst of your struggles to keep debt under control, there are options once you’re back on your feet. By using the advice provided above, you can create a solid plan to start knocking down those balances and reclaiming your life.