Ending up in debt is never a good thing. While it was a good short-term solution to your financial situation, now you have to make monthly payments at a high interest rate in order to get back on your feet and recover from the financial stress. The only way to consolidate your budget is by changing your spending habits and creating a detailed monthly plan on your expenses and savings. But before you can do that, you need to get rid of your debt.
Although it might seem like paying off your debt is a process without an end, there are a number of potential solutions to your debt related problems. Debt relief programs have become the most popular solution for people in debt. Still, these don’t always work as promised, and a debt relief program will take some time before successfully being completed.
But if going bankrupt or deciding for debt settlement is not the best option for you, what debt solutions remain? The most important thing of all is to change your financial habits and become better at budgeting and planning. Let’s take a look at a few tips on how to get out of your debt problem.
Before giving you a few tips on how to cope with your debt problem, we want to suggest a number of mistakes that people make and thus ruin their chances of getting out of debt. By joining the What Lies In Your Debt program, you will be eligible for relevant consultations and to get a number of customized strategies on how to approach your debt problem.
First, the main reason why debt consolidation and relief programs aren't the optimal solutions is that people continue with their spending habits even while they are deep in debt. The debt did not happen on its own, and if you don’t understand the root of the problem, there is no way you can solve it. We recommend you hire a financial adviser or counselor that will help you in making an efficient budgeting plan.
Another common mistake is that people run to debt relief programs without doing enough research and checking if it is an adequate solution for their problem. For example, a debt settlement or bankruptcy debt relief program will not work if you owe taxes or child support. On the other hand, negotiating a debt relief on your own requires good previous education on the matter.
Even if you decide to go for a debt relief program, you should do adequate research on the company you will be cooperating with. Not all debt relief agencies have the same success rate or partner with your creditors. Most of the companies ask for upfront fees which means that you are at risk of losing even more money, instead of erasing your debt.
Lastly, once your credit card balance is back at 0 and you have settled your debt, don’t make the same mistake and run back into your old spending habits. You should learn from your past actions and make a plan on how you will act in the future once your debt is erased.
Apart from debt relief programs, there are a few debt solution tips that we would like to suggest, most being a part of a long-term strategy including implementation of healthy spending and saving habits in order to consolidate your finances. Once again, we would recommend that you try out the What Lies In Your Debt platform – it is a great source of information and will empower you to pursue an optimal debt solution.
Start implementing healthy habit changes while you are in the process of debt repaying. What does this mean? You should learn how to control your spending urges and monthly budget once your credit card is back to $0, and what better way to start your education than while you are still repaying your debt.
Consult with a financial adviser and create an effective budget strategy. For example, 40% of your income goes to essentials; 20% of your income goes to your wants; 20% of your income goes to debt repaying, and the last 20% of your income goes to savings. Track your progress and make further changes according to the given results.
If you have a hard time paying off your debts with your current income, consider getting a side job. It doesn’t have to be anything demanding – if you enjoy web designing or writing in your free time, search online for possible freelance jobs and earn some extra cash. Once again, the fact that you will be earning more doesn’t mean that you should spend more – quit buying things out of boredom or because you think it is time to renew your wardrobe. Buy only the essentials and be strict with your budget rules.
Along with that, if you manage to earn some extra income every month, you can turn that into extra monthly payments and thus repay your debt before it is due. It is a great debt management strategy and as a positive consequence, your credit score will improve as well.
Lastly, if those monthly payments still seem too much, you can always go ahead and apply for a debt relief program. Still, before you do so, you should educate yourself on given options and consult with your attorney.
While there are four types of debt solutions – bankruptcy, debt settlement, debt management, and self-negotiation – each comes with certain pros and cons and that is why you should really consider all of your debt solutions before making any decisions.
Monthly payments take a huge bite out of your budget, but you need to accept that it is your own fault for overspending. This is the reason for almost every debt, and that is why before you can think about debt relief programs, you first have to settle your spending habits as a part of the long-term debt solution.