It’s an overwhelming experience to be deep in debt. You feel that you have no control over your life.
You will be prone to make some hasty and ill-advised decisions, and you might be tempted to try certain services that you hope will solve your debt problems. Correctly used, these debt elimination solutions will be effective, just be careful that the chosen solution doesn’t add to your debt.
The Realisation of the Problem
Before making that decision to do something about your debt, take the time to research the solution before opting in. Also understand that regardless of how good these debt free solutions are, it’s still a personal decision to have some control to ensure that in the future you do not owe more money that you cannot afford once again.
There is a psychological reason for debt. Beating debt has as much to do with what’s going on in your head as it is to do with what’s going on in your wallet, or purse. Like all personal problems, you can solve them by admitting you have problems. Let’s take a look at 5 steps you can consider if you want to beat debt:
1. Take Control
If you are at this stage of seeking help, you have reached the point where you admit that debt is killing you. You are falling behind in your repayments. The interest charges are adding up. Even worse, you are using a loan to pay off another!
2. Living Within Your Means
Take out your credit card and charge card statements. Where exactly have you been spending your money?
Walk around the house and look at all the stuff you have, and the items you bought using your credit card:
- Were they all worth it?
- Are the items a need or a want?
- Have they made a significant difference in your life?
- Are there items you can see, and you say to yourself, “Gee, I haven’t even paid for that yet!”
3. Reduce Your Stress
Debt is a nightmare, and as a result, the stress associated with debt can send you into a spiral of despair. Can you change that? Does it have to be like that?. There’s a way out, but it’s not an easy way out. You have to resolve to take control of your spending and yourself so that you can get your life back. Once you have that resolved firmly in your mind, then you can consider consolidating your debt.
4. Debt Elimination
You have that one chance of repaying your debt with consolidation. Consolidation doesn’t make the debt disappear, but all those loans and other debts you have to get lumped into one bigger loan that can be paid off over a longer period and at a lower interest rate. By doing this, you free up some of your income, and you should see a significant drop in your stress levels.
At this point, you should stop using your credit cards. Debt elimination is achieved by living within your means.
Try this – leave your credit cards at home for a week and live by using cash every day. As strange as it might sound – pay for everything with cash. In this way, you get an idea of why you need to budget. There’s nothing like watching the cash slip through your fingers to give you a good understanding that your supply of money is limited.
After a week has gone, see how you feel about how it went. If you found it extremely hard to prioritize your spending but succeeded, then congratulations – you have gained control. If you stumbled and found it too hard, almost impossible, then try again. Only the people who are tough on themselves can control their money.
5. The Road to Recovery
There’s a lot of truth in the saying that being able to buy useless luxuries does not lead to happiness. Happiness is about being free. Destroy all your credit cards except one. Enjoy the cutting up ceremony. The remaining credit card has to be paid back every month, without fail. Spending the money you have on things you enjoy is far better than spending money that you have borrowed. Try not to give in to temptation with money that’s not yours for some self-indulgence.
Other Debt Solutions
If a consolidation loan is going to be impossible to get, then you may have to resort to alternate solutions.
- Bankruptcy – the shame that was once attached to bankruptcy has long past gone in this 21st century. If your finances are in such bad shape as to warrant applying for a bankruptcy order, take it as an opportunity to make a new start. Applying for loans may be a little more difficult, but the fact is that all your debts will be gone and you can at least approach life stress-free.
- Debt Settlement – Your creditors may be happy with a smaller payment to settle the debt. You can make a legal arrangement to pay an amount that is considered and agreed to be enough to settle the whole debt. It’s not a common form of debt elimination, but it’s a reasonable substitute and has a lesser negative impact on your personal credit score because the debt is recorded as having been paid in full.
Money can make you a slave, or it can be a key to freedom. When your debt is mountain-high, you are enslaved. When you are in control, you can become free.