Finances Falling Into the Red? 4 Effective Steps to Bring it Back Up

Friday, November 1, 2019, 6:00 AM | Leave Comment

If the phone calls and final notices have started piling up and weighing you down it’s time to take control of your financial situation.

While most people focus on finding ways to make more money, you should also be thinking of ways to get rid of the debt.

Here are four effective ways of digging yourself out of debt.

Finances Falling Into the Red? 4 Effective Steps to Bring it Back Up

  1. Loan Consolidation

    The common way to consolidate your loans is to take a sizeable loan to pay off all of your small loans. This takes you from making several payments at varying interest rates to making a single payment at a fixed rate. There are some risks involved, especially if you use a home equity loan to consolidate your bills.

    However, if you:

    • are disciplined about paying on time

    • close your credit cards and similar accounts once you pay them off

    • and consolidate the debts with the highest interest rates with a loan with a lower interest rate you can benefit from loan consolidation.

  2. Debt Settlement

    Debt settlement means that your creditors have agreed to accept an amount that is less than what you owe in order to close the books on your debt. Though you may have only paid a fraction of the amount owed, the creditor will consider the account paid in full and can no longer seek payment on that debt.

    Debt settlement programs work to negotiate with creditors on behalf of their clients for a fee. There are risks associated with debt settlement, and only certain kinds of debt (mostly unsecured debt like credit card debt) are eligible. However, it can create a launching pad to rebuild your credit.

  3. Liquidate Assets

    Liquidating is a fancy way of saying “sell your stuff”. For smaller debts, this may be the best way to go. If you are holding on to old albums or trading cards that collectors would pay top dollar for, now is the time to consider parting with them.

    Plenty of online stores have started out of a need to get some quick cash. But don’t limit it to things around the house. How about your car? You could sell it and buy something smaller and cheaper and commit the proceeds to your debts.

    Plenty of people have had to downsize their lives in order to pay off debts, selling boats, timeshares, vacation homes, ATVs, even home theater systems to raise the cash necessary to pay off debts. Perhaps its time for you to ask yourself what you really need and how much your peace of mind is worth to you.

  4. Cut Credit Spending

    Last but now least, grab those credit cards and start cutting. If you are struggling with unsecured debt, it can be tempting to fall back into debt once everything is paid off. Pick one credit card for emergency use only. Keep that one open and close all of the others. This way, even if you max out your credit card, you only have one card to pay off.

By choosing the course of action that is best for you, you can be living debt-free sooner than you may think.

Author BIO

Meghan Belnap is a freelance writer who enjoys spending time with her family. She also enjoys being in the outdoors and exploring new opportunities whenever they arise. Meghan also enjoys researching new topics that help to expand her horizons. You can often find her buried in a good book or out looking for an adventure. You can connect with her on Facebook and Twitter.

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