For one reason or another there are people all over the world who are living beneath a mountain of debt which they simply cannot escape. In fact for some years I had a similar problem after losing a job shortly after taking out a personal loan. I was fortunate enough to have a great friend in Janet Pribanic who, using her financial brain, showed me a great deal in terms of managing my money and ultimately paying my way out from under the mountain.
Each person’s situation will be different of course, but there are some general rules which you should follow if you have an issue and you are trying to pay your way out of debt.
Many people ignore debt in the hope that it will somehow go away, this sis not the case and in doing so you will actually be causing more problems for yourself. The best thing that you can do in a situation where you have debt that you cannot afford, is to face it up and accept what you owe, thus taking responsibility. If you are receiving letters or phone calls from your creditors, it is imperative that you speak to them and work out a deal in order to pay off your debts in a way that keeps both parties happy.
Whatever you do, don’t even consider borrowing more money in order to pay off your debts, all you will be doing in this situation is adding to your problems, and in all likelihood you won’t be accepted if you do have outstanding unpaid debts. The only time this should be considered is if you are able to secure a bank loan to consolidate your debts, and ensure that you owe to just one institution. As aforementioned however, if you do have debts, it is likely that you will have bad credit, which will leave you only able to borrow from loan companies that charge extraordinary interest.
There are a couple of options such as filing for bankruptcy or a CCJ, but the truth is that whilst these will help you to get rid of your debts, they will tie you up financially in the future. It can take years after a court order such as this to fully recover and you will have to wave goodbye to any chances of a mortgage, credit card or car finance in the future. Try to avoid looking for shortcuts and get out of debt the correct way, by paying it off.
Golden Rule – Spending
If you are paying you way out of debt then you will need to take drastic measures to ensure that you greatly reduce your spending. Perhaps you will have to move to cheaper accommodation, downgrade your car, forget vacations and other steps to make sure that you have enough money to become debt free.
Paying your debts off is not fun, but the moment that you pay the final payment, you will realize that it was all worthwhile.