Overwhelmed by Debt? 5 Ways of Digging Yourself Out
For most people, it starts with a credit card. Maybe you signed up for a free credit card when you were in college, and before you knew it, those couple of $10 charges somehow manifested into a few thousand dollars worth of debt. And to add insult to injury, when you graduate college, you are now faced with paying back that massive student loan. I hope you have a nice, cushy job lined up!
At some point in most of our lives, we will be overwhelmed by the amount of debt that we have. However, just because you have accrued a little “luggage” doesn’t necessarily mean that you can’t drop some of it off.
According to an article printed in How Life Works, there are five strategies that you will want to avoid in order to dig yourself out of the debt hole:
- Minimum Payments- Paying only the minimum payment can actually be a suicide mission because it will only result in your overall debt actually GROWING, thereby making your debt problem worse.
- Friends & Family as Fallback- You should never have to rely on your friends or even your family members (i.e. mom and dad) to pick up the slack for the financial mistakes you have made. Sure, if they volunteer to help you out once or twice, that’s one thing- but constantly running back to mom and dad or even your BFF can wind up damaging the relationships with the most important people in your life.
- Unscrupulous Credit Counselors- Counselors who demand cash up front or high fees should send up red warning flags everywhere. Avoid these people.
- New Loans to Replace Old Loans- Always AVOID taking out new high-interest loans to pay of low interest rate loans. It may seem like it makes sense to have just one payment to pay back, but in the end, you will actually end up paying back more money.
- Declaring Bankruptcy- Don’t always jump for the big “B” word. Instead, look at your options. You may find, instead, that debt settlement works better. The last thing that you want to ever happen is for your credit to be ruined. [source]
I agree that filing bankruptcy is not always the right solution, but a skilled bankruptcy lawyer is often the best person to explain all the reasonable options available.
There is a sixth way… creating a profitable business and delegating the finace management to an expert.
Reality check. If you have missed payments on your credit card, mortgage, or car payment, your credit has already taken a hit. Most who are in financial peril already have horrible credit. Bankruptcy, if appropriate, has proven to actually improve your credit rating. The big “B”, as you call it, is a lifesaver for the vast majority of people who need to file for debt relief.