Debt is a trap we can all fall into, though we can’t always avoid it. There’s the mortgage on our homes for starters, as well as car loans, credit cards, and anything else that may be relevant to your life. It is possible to become debt free, with methods such as debt settlement. Read our article here, http://www.canvaspretty.com/, for more information on that option. However, while there are ways to reduce debt, there are also ways you can make your situation worse. The following are some of the things you need to avoid.
- Adding to your debts
The last thing you want to do when you are already in debt is add to your problem. The trap many people fall into, for example, is paying off a current loan with another one. There are also people who sign up for yet another credit card, possibly because they have maxed out their current card, and need another method to maintain their lifestyle. These bad practices will keep you in debt forever. Instead of adding to your debts, a better option is to consolidate them with firms such as https://debtconsolidation.loans/. Having one monthly payment (with lower interest) is easier to manage than yet another loan that is going to cause you both emotional and financial stress.
- Ignoring your lenders
As the proverb says, ‘don’t bury your head in the sand.’ Throwing your credit card in the bin or refusing to answer the phone when the loan company calls, is not going to help your situation. If you are in debt, you need to deal with it. If you can’t make the payment, be honest with your lender and tell them about your situation. They may be able to give you a payment holiday or reduce the interest rate. If you don’t tell them, they will be forced to take action against you, and may begin legal proceedings. At the very least, you will find yourself with extra charges for non-payments, putting you into further financial trouble.
- Paying the minimum
When you are paying back the minimum on your credit card each month, you are generally only paying back a portion of the interest owed. You will never make any inroads into paying off the debt, and you will be stuck with the blasted thing for a long time to come. So, work out what you can reasonably afford to pay on your loan each month, and try to pay off more than the minimum amount. With some concerted effort on your part, and some savvy budgeting, you will clear the debt eventually.
- Not seeking help
You don’t need to struggle alone. If you are overwhelmed with debt, speak to somebody about the problem. Look for a non-profit organisation, such as https://www.stepchange.org, and get all the advice you need to dig your way out of your debt. They will offer you a solution to your problem, and at the very least, you will have peace of mind knowing you have somebody on your side to help you.
- Continuing to spend frivolously
Finally, this is the worst thing you can do when in debt. You need to make every penny count, so only spend your hard-earned cash on what you need, and not what you want. It’s no good buying a takeaway because you can’t be bothered cooking, or buying a new outfit in a comfort shop binge. If you can’t afford something, don’t spend the money. So what if your credit card still has money available! It’s not free money as you will have to pay it back, so curb your spending impulses and focus on saving and budgeting your money for life’s essentials.
Do you have any financial tips to help our readers? Be sure to let us know! Thanks for reading.