Debt can be a difficult part of life that you have to overcome. Whether it be from various loan deadlines that are approaching, your student loans from when you took college, or even borrowing money from a friend or family member, debt is the monster under many adult’s lives. But how exactly do you go about helping yourself if you’ve fallen down the rabbit hole of debt?
How Debt Affects You
The biggest factor why you want to pay off your debts is the fact that important loans will be harder and harder to get, the longer you procrastinate on paying your debts. This reflects clearly on your credit score. Every person who has taken a loan in their lives have their credit score and it goes up or down depending on what you do with those loans. One thing to keep a note of here is that your credit score is what many companies use to gauge your risk.
You might be wondering what risk means in regards to debt. Well, your risk is how likely you are to pay the company back when they give you a loan. The lower your credit score, the higher your risk. The higher your risk, the fewer companies will be willing to give you a loan. Simple right? Get your credit score low enough and you won’t be able to find anyone that will be willing to give you a loan, even if it’s for a dire situation.
Imagine yourself in dire need of some sort of financial support for an emergency like surgery. If you can’t find anyone willing to loan you the money you need to save your own life, then it’s just game over for you.
What You Can Do About Debt
Luckily for you, there are several ways a person can help themselves dig themselves out of the hole of debt. Some methods are simpler than others and these can be done by most able-bodied adults. Remember, debt isn’t a straight plummet to the bottom. It is instead a slow descent down a hole that you’re digging yourself into. We’ve put together a list of all the little things that you can do to help yourself out of debt
One of the most important things to do when you know you’re in debt is to start creating a budget. In this new budget, you’re going to need to cut out any unnecessary expenses. These are the things that you can live without.
But do remember to keep yourself engaged and happy while observing your budget. So do try to leave some of your earnings to leisure and relaxation. This keeps your spirits high and you won’t plummet into depression, which can be an even bigger problem than debt. Do make sure that your leisure choices aren’t digging into your salary too hard, however.
Your weekly visit to that high-class restaurant? Not this week, because you’ve got cheaper food at home. Your subscription to Time Magazine? Cancel it and resubscribe when you’re not in debt. That cross country vacation you have planned for this weekend? Postpone it for some other time because it isn’t happening right now
Every unnecessary expense you make is money not used to pay your debt that is slowly eroding your credit score. And the faster you get out of debt, the better your chances when it comes to keeping your credit score high enough for emergency loans.
Tell Your Kids That They Have to Budget Too
Teaching kids can be a difficult task as most of the time they simply don’t know the hardship that comes with earning money yet. This is especially true for adolescent kids who are starting to want more and more out of you. Despite this, it is up to you to teach them how important it is to make sure that they have a budget as well as their expenses can easily drive you deeper into debt if they aren’t responsible with the money you give them.
Think About Getting A Side Job
Remember that debts are ticking time bombs that don’t give you the luxury of time when it comes to paying them off. Your single day job just might not be enough to keep yourself and your family afloat with debt looming over the horizon. So what better way to make the most out of your time than to get a side job that will help you pay for it? You don’t have to work two full-time jobs to make a dent in your debt either.
Some part-time jobs can be very good for someone with a full-time job. Selling various products to your co-workers like makeup, food and the like are an excellent option for those looking for a little extra cash to pay off a debt. Another thing to take note of is that your second job doesn’t have to be a bore either.
Consider any extra skills and hobbies that you might have. Translate your excellent writing skills into a great side job that lets you write inspiring articles for the masses. Use your programming know-how to create websites for businesses or even go the extra mile and publish your own game online. Let your imagination fly when it comes to getting a second job and it won’t even feel like you’re working a second job.
Just remember that, regardless of how you want to go about getting a side job, sacrifices have to be made unless you want to get hit by an emergency that you won’t be able to alleviate because you’re being refused life-saving loans.
Consider Selling Things You Don’t Need
This is one of the last resorts that you have when it comes to getting out of debt. If you’re in dire need of cash, you can sell some of the old things you have lying around in your home. Collector’s items like figurines, cards, old coins and the like can sell for a large sum of cash that can be used to pay off a debt with other collectors usually bidding over tens of thousands of dollars for the rarest items in auctions. Appliances can also sell for a decent price if you can find the right person to sell them to.
Remember that these excess items are less important than making sure that your debt doesn’t go too far. You can get them back later when you’re clear of debt. So, try to canvass around your home or business, and see what appliances and collector’s items you can sell-off.
Get Rid of, or Minimize The Use of Your Credit Card
Credit cards are the best friend of many avid shoppers. Little do they know that it is slowly driving them into debt. The main reason for this is because you don’t exactly know how much you’ve spent on a credit card unless you go to your issuing company and request a spending report from them.
You’re suddenly going to be surprised that by the end of the month, you’ve already spent a thousand dollars more than your budget will allow. And many fall deeper into debt because of it. A great solution to this is to make sure you document what you use your credit card on yourself on a list or note, or better yet, limit your credit card to necessary expenses like emergencies.
Go After People Who Owe You
This is more for businesses that give out services like the recruitment and staffing industry. These commonly crop up as unpaid backdoor hires fees that you don’t get to pick up because you just don’t know how to proceed with the case against the offending companies. These fees can reach thousands of dollars that you can easily use to pay for your own company’s debt. You won’t even know the amount you’re owed till a collections agency picks up the amount for you. So make sure to do your best to chase after these companies or individuals that are hiring your candidates from behind your back.
Bankruptcy For A Fresh Start
Truly the final nail in the coffin of most debtors in bankruptcy. Personal bankruptcy will ruin your credit score guaranteed but it has the benefit of giving you a fresh start, albeit at a disadvantage. You’re going to struggle to try to rebuild your credit scores as most, if not all, your accounts involved will show a report on it that says that it was part of a bankruptcy case.
These reports will stay on your accounts for up to seven years. So you better be ready for the long haul and make the most out of your new beginning to ensure that after those seven years are up, you’re able to better handle debts. However, despite these setbacks, you’re technically debt-free and it is now your responsibility to keep it that way in the following years.
Regardless of whether you’re a simple family just trying to get by or a large multimillion-dollar company, debt is a problem that you’re eventually going to deal with or suffer from. With these simple tips in mind, you can start saving yourself from the pain and suffering that a crashing credit score brings.