If you’re snowed under with debt, it can be hard to see the prospect of better days. No matter how you slice it, your earnings are not covering your debts, and something has to be done. There is no sure-fire way to get out of personal debt. The best way is usually a holistic approach, making positive changes in several areas. Here are some proven strategies to help you get your life in order and move forward.
A Clean Slate Can Be Appealing
When it comes to digging yourself out of debt, it is worth bearing in mind that bankruptcy is an option. Many people feel that they would ideally like to pay their debts rather than eradicate it completely, but for others, a clean slate is an appealing option. Going bankrupt is no picnic, but there are many benefits, too. Your assets will be seized, but you will get out from under the thumb of creditors, and you will be left with enough funds to live on. If you’re trapped in a seemingly never-ending cycle of debt with interest accumulating almost before your eyes, bankruptcy might feel like a good idea to you.
However, there are significant downsides. You could lose your house, car and any other precious items you own if they are of value. Your credit rating will suffer for up to six years, which could potentially stop you from moving forward with your life. A bank loan or mortgage would be out of the question – it will even be hard to get a cellphone contract! And while you may enjoy immediate relief from your most aggressive creditors, your financial worries will not be over. Besides the upfront cost of bankruptcy, you could be required to make regular debt repayments for three years afterwards. If you’re not a citizen of the country in which you live, going bankrupt could cause you immigration headaches down the line.
When it comes to bankruptcy, it’s essential to weigh the pros and cons. You may decide to bite the bullet and free yourself from debt immediately. You could look into a lender like Quick Loans Express to buy yourself some time to get your finances in order. If you manage to create a little breathing room for yourself, these ideas could help you get your debts under control and avoid bankruptcy.
Zap Your Expensive Debts First
One of the most intelligent and practical approaches to debt management is to pay only the absolute minimum monthly payments on all of your credit cards and debts… except the biggest one. Select the one single debt costs you the most in terms of interest (and hours of sleep lost!) and devote all of your energy to zapping that sucker as soon as you possibly can.
Once your biggest, baddest debt is a thing of the past, redirect all of the cash that you were sinking into that debt and start working on the second-biggest debt. Work down the list in this fashion, paying down the worst debt, and progressing down the ranks. One of the best things about this method is that you will be able to see progress quickly, as you tick off one after the next.
Buy a Used Car
Firstly, if you’re struggling with debts and you need new wheels, your best bet is a second-hand vehicle. You’ll get much better value than a new car, end of story.
If you’ve recently bought a new car, consider selling it immediately and buying a used vehicle. While it’s never nice to sell something you’ve just bought – especially if your new car is your baby – you’ll be pleased you did once you pay down some debt and start breathing a little easier. It is a truth universally acknowledged that a new car loses value once you drive it off the lot. Then it continues to depreciate rapidly after that. The older it gets, the less it is worth.
If you sell your brand new car, you won’t get what you paid for it, but you will get a lot more than you would get for it on the market in a few months or a year’s time. Take that money and buy a car that is a few years old. No, it won’t be the nicest ride, but you will have a good amount of cash left over to pay down a portion of your debts.
Start a Side Hustle
If you’re good at something that you do outside of work, you could be sitting on a brilliant opportunity to earn a little extra cash and pay down your debts faster. Monetising a hobby can feel a little cynical, and you may resist it at first, but many people find that an urgent financial situation gives them the push they need to start investing more time and energy into something they enjoy, and getting more out of their leisure activity.
A quick search of the best-reputed blogs out there will reveal that side hustle ideas abound. What you choose will depend on your skillset. If you’re a brilliant writer, consider scribbling blogs or articles for your local newspaper, or tap into the power of the Internet and find clients from all over the world. If you’re a musical maestro, consider teaching music lessons on the side. Even if you think you don’t have any skills outside of your work, you may be able to draw on your work expertise as a side-hustle through online business coaching or mentorship.
When debts start mounting up, the world can feel like it’s falling in on you. Going bankrupt is an option, and thankfully so, as many people would not be able to get out from under the weight of their debts without this escape route. But bankruptcy is not for everyone. If you want to push through and try to tackle your debts yourself, these suggestions will help you take a deep breath and make concrete changes. The journey will not be easy, so it’s important to ensure that every step you take is geared towards digging you out and moving forward.