Getting out of debt isn’t easy, but it certainly is possible. If you’re sick of owing money to people and are determined to erase your debts, consider these vital dos and don’ts – they will help you to make the right decisions when dealing with your debt.
Don’t borrow any more money
Naturally, the best way to escape debt is to stop borrowing money. The only time you should ever take out a loan when trying to escape debt is for refinancing purposes when you could save money in the long run by paying less interest. Consolidation loans as offered by Lending Tree can also be useful as they can pay off multiple debts so that you’re left with only one single manageable debt to pay off. Never use emergency loans to pay off debts as these loans have high interest rates that will only add to your existing debt. If you have to borrow money for an emergency, try to ask a friend or family member so that you’re not paying interest.
Do make major cutbacks
By making major cutbacks, you’ll have more disposable income and more money to throw at your debts in order to pay them off faster. Think of these cutbacks as temporary measures until you’ve paid your debts off. You could start budgeting your food shop or driving less often. Serious cutbacks will allow you to pay off your debts more quickly – this could include downsizing to a cheaper property or taking your car off road and giving up driving temporarily.
Don’t ignore your creditors
If you’re getting demand letters for debts you can’t currently pay, don’t think that by ignoring these debts that they’ll go away. Tell your creditors about your situation – many creditors will be more understanding and may put off taking things further. This could give you more time to save up the funds to pay off these debts. In other cases, you may be able to negotiate with a creditor and pay off the debt over a longer period in smaller instalments.
Do talk to people
It’s important to talk to people about your debts both for advice and reassurance. There are many professionals who can help with debt management – sites such as The Ascent by the Motley Fool can offer various advice on options for getting rid of debt. Make sure to also open up to your friends and family – it could make it less awkward when you have to turn down social events due to not having the funds.
Don’t cancel your credit cards just yet
Whilst canceling your credit card is a sure way to stop you from using it, you should wait until you’ve paid off all your credit card debts before canceling your card. If you don’t do this, it could have a seriously negative effect on your credit score – which is something you don’t want to reduce further if you’re already in debt.
Don’t stress about it
The most important rule is to not let debts wear you down mentally and physically. Realise that whilst you may not be able to spend frivolously, there’s more to a happy life than money. Go on walks, make the most of free attractions, meet up with friends and enjoy what you have – a positive attitude will help you to get out of debt.
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