Debt can be debilitating, it can put a huge mental strain on you as well as strain on relationships and on families. For those of us who are currently in debt (and don’t see a way forward anytime) solutions can be found. Money problems and financial issues can happen to the best of us, do not lose hope if this is happening to you.
Never feel embarrassed or too proud to ask for help. The sooner you address any financial or debt issues, the easy it will be to find a solution. If debt levels are causing you financial issues that are impacting your life some tips to help you get back on track:
- Complete a total assessment of your current financial situation including listing all debts that you owe, monthly repayments, interest rates, assets, all income, etc.
- Look at any assets or household items you can sell to reduce your debt levels and do some research on any potential government payments or entitlements you may be eligible due to your current financial situation.
- Complete an in-depth (lean) budget focusing mainly on essentials such as shelter, food, transport, basic utilities, etc. as well as debt repayments. This should include a review of loans, utilities, insurances, etc. to see if there are cheaper options for you.
- With the above budget, work out what debts you can afford to repay each month and reach out to your creditors to discuss potential new repayment arrangements. Focus should be on your debts that have a higher interest rate or on debts that affect your living circumstances i.e. mortgage or rent.
- Don’t take on any more debt until you are back on top of your finances. Any future debts should only be quality investment debt with future personal debt to be avoided.
- Automate your expenses where possible, live off the new budget, stick to your debt repayments and look to build up savings then investments. Increasing your income should be a focus as soon as possible (either through a pay rise, new job or taking on a 2nd job).
- Start working on building your passive income streams and investments.
You may also have access to a financial counsellor service provided by your local state/city (either in person or via telephone). This service should be a free and confidential service and can be helpful in assessing your current financial situation and dealing with creditors. Please avoid meeting with people or organizations that promise to “fix your debt issues” or “solve your financial problems” for a fee. In nearly all cases these are debt consolidator or refinancing companies that will be charging significant fees (that could be used to repaying debt) and putting their benefits before yours. The may be a time when you seek out debt consolidation or refinancing options however do this on your terms after you’ve had a thorough review of your financial situation and debts, done your research as to what is in your best financial interest or even spoken to a government provided financial counselling service.
Below are links to some of our articles around the topics of debt and getting out of debt. We also provide some tips via our newsletter so make sure you subscribe to Stop Doing Dumb Stuff to receive regular updates either around debt, making money or passive income or alternatively reach out to us at firstname.lastname@example.org with any questions you may have.