We all strive for financial freedom.. a debt-free life.. a secure financial future.
But what happens when you are in financial hot water- having trouble paying your bills, getting endless notices from creditors, accounts being turned over to debt collectors?
Indeed, you’re not alone. Many people today face a financial crisis. So if you need help with your debt, there’s no shame in that. It shows that you are willing to do what you can to finally get this sorted. Whether the crisis is caused by overspending, personal or family illness, or the loss of a job, it can seem overwhelming. But your financial situation doesn’t have to stay bad or go from bad to worse. It can be overcome. You aren’t alone and it might make you feel less alone to look up friend or family who are in a similar situation. My friend did a background check on other friends and discovered how common it was.
According to Wikipedia: “The most common form of consumer debt is credit card debt, payday loans, and other consumer finance, which are often at higher interest rates than long term secured loans, such as mortgages. The interest rate charged depends on a range of factors, including the economic climate, perceived ability of the customer to repay, competitive pressures from other lenders, and the inherent structure and security of the credit product. Rates generally range from 0.25% above base-rate, to well into double figures.”
Your own debt might not just be coming from one, but multiple causes. But what matters is that you are serious about making positive changes in your financial situation. The first step is to make a realistic assessment of how much money you take in and how much money you spend. Do this by making a list of your income from all sources. Then, list your “fixed” expenses – those that are the same each month – such as mortgage payments of any kind, these could be bridging finance payments, etc, rent, car payments, and insurance premiums. Then, evaluate your credit score. What’s affecting it? Do you know how to remove derogatory credit? Improving your credit score will make it much easier for you to borrow any money, and it’ll get you better interest rates on what you borrow. Next, list the expenses that vary – like entertainment, recreation, and clothing. This is a very helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. Your goal should be to make sure you are able to make ends meet on the basics: housing, food, health care, insurance, and education.
Or if you think you need debt help from a professional, look into getting credit counseling from a reputable organization. The benefit of debt consolidation is that it allows you to choose a debt repayment plan that will help you combine all your monthly payments to your creditors into one monthly payment. This type of debt repayment plan is often combined with lower interest rates and other creditor benefits so that the monthly payment is manageable for you and help you get out of debt as quickly as possible.