When your debt is keeping you up at night and consuming your every thought it’s time to make some changes. Getting your finances back on track won’t be easy, but you will be happier and less stressed once you do.
Nevertheless, you’ve got a long road ahead until you see light at the end of the tunnel. If you don’t know what to do when your debt is taking over, there are options.
1. Trim Your Budget
Of course, the very first thing you need to do is trim your budget as much as possible. Shut off your cable, stop salon visits, and eliminate all unnecessary expenses.
It’s time to make the tough decisions that could save you and your family from further hardship.
2. Negotiate with Creditors
When your debt is taking over its time to humble yourself and take action. Call your creditors and try to negotiate lower payments on your bills. Many will work with you in order to get some payment rather than none.
If possible, reach a settlement on debts and pay them. Or, ask for a discount or reduced interest rates. Do whatever you can to reduce what you owe. Take notes on all conversations including who you spoke with, the dates, and what was agreed upon.
3. Consolidate Credit Cards
You might be able to consolidate your credit cards to lower your monthly payments. When you have one payment instead of several it may save some interest each month.
However, it could increase the interest instead if it stretches your payments out over a longer period of time. You may be able to pay more on the bills some months to lower the interest rates. Still, that could be a gamble you’ll lose if you don’t find a way to change your spending habits.
If consolidating is something you wish to do, look for a card with a 0% balance transfer. This could help you eliminate interest for several months and save you money. All of your payments would be applied to the principal you owe paying your debt down faster.
4. Start Side Hustling
Another thing to do when your debt is taking over is to start a side hustle. Having extra money in your income can help you pay your debt faster and relieve you of stress.
By applying all of your side hustle income to debt you will bring it down faster. There are plenty of side hustle opportunities you can look for to help you achieve the financial freedom you desire.
5. Put Credit Cards in Cold Storage
To prevent the temptation to pull out plastic for your purchases, put your credit cards on ice. Literally put them in a block of ice in the freezer so you stop using them. This may be the best way to pay off your credit cards without getting further into debt.
Or, another option is to put them in a safe deposit box at the bank or even cut them up. Do whatever you honestly need to so you stop creating more debt.
6. Consider Bankruptcy
When you are out of all other options it could be time to consider bankruptcy. Most people don’t want to take this action, but sometimes it is necessary in order to get your life back on track.
There are several tips to file for bankruptcy that can help when your debt is taking over. Filing isn’t easy because legal terms can be difficult to interpret.
You want to make sure you understand your rights so you can handle your finances in the best way possible. That’s why getting legal help is important in these circumstances.
Certainly no one wants to be in a bad financial position. But when your debt is taking over there are options to get back on the right path.
Do you feel like your debt is taking over? If so, what actions have you already taken?
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Troy @ Bull Markets says
I’ve been lucky enough to be debt free my whole life. My parents paid for university (university in Canada is rather cheap), and I started a business/hedge fund with a partner in university.
That’s great! I’m glad you’ve appreciated and used their investment in you to make your life better. Keep working hard and staying out of debt!