Even if you have a little debt, you need to find ways to properly manage it. Whether you’re paying back your tuition, loans, or credit card bills, this guide is designed to help you better manage your expenses and better understand the options available.
Since the COVID-19 pandemic, a sharp rise in unemployment has sparked talk of an emerging debt crisis in the US.
As the coronavirus hit, US household debt peaked at over $ 14 trillion, comprised primarily of mortgages and student loans in addition to credit card debt. With unemployment significantly higher than that of the 2008 financial crash, more of us than ever may be staring at financial hardship in the months and years ahead. However, the following tips can help you better manage your debt and stay away from the troubled financial landscape.
- Review your expenses
- Include budgeting
- Create a billing calendar
- Be sure to prioritize your urgent debt
- Consider debt consolidation
- Small investments could help save your way out of debt
- There are still options if you can’t pay off your debt
Review your expenses
It may seem like an obvious point at first, but the most important step you can take is to review your financial expenses. Write down your expenses in a journal – whether physical or mental – and keep track of your recurring purchases. This will help when it comes to eliminating unnecessary spending habits.
Think about making small changes to your daily expenses. These changes don’t seem to make a significant difference, but expensive habits can add up quickly. And they can make a significant difference on payday.
Sticking to budgets can be a great way to better manage your expenses and income in order to better pay off your debts. Find a debt management app that can help you find out where your money is going each month and organize how much is left once your bills have been paid.
By re-evaluating your various expenses, it is possible to obtain a recurring amount of money that can be used towards monthly debt repayment.
Create a billing calendar
Use a bill payment calendar to find out what debts you can pay off each month. This tool is great for keeping track of the amount of your debt and determining how to address each of the amounts owed.
For example, if your payday is on the 25th of every month, you can use the same calendar every month to pay your bills. If your payday falls on different days, just create a new calendar each month.
Be sure to prioritize your urgent debt
Make sure you pay off your urgent debt first. Although you could settle a number of small debts at once, failing to pay a large debt can have a bigger impact on your home or possessions.
However, you can also have large debts with milder due dates attached. If you have multiple debts, order them in terms of the severity of the lack of their payment dates.
You may need to contact senior creditors if your situation is more urgent, such as: B. if there is a real risk that you will be involved in an eviction. Be sure to let your creditors know that you are looking for debt counseling and that you want to find a satisfactory solution for all parties.
Consider debt consolidation
Debt consolidation loans help you consolidate your various debts and repay them using a single loan – usually along with more manageable monthly payments. This means that in theory all of your debts can be consolidated into a single lender.
If you are having trouble keeping your debt under control, it is important to consider whether you can keep up with the terms of your new loan. Always seek debt advice before making any decisions you are not sure about about consolidation loans. Contact a debt counseling organization to find out if a debt consolidation loan is eligible.
Small investments could help save your way out of debt
The idea of spending more seems like the last thing you need right now. However, registering with a microinvestment app could be an efficient way to save small amounts of loose change that can ultimately be used to pay off accumulated debt.
The way microinvesting works is that apps can automatically round up your daily purchases to the nearest dollar and invest the difference on your behalf. This means that a small part of your expenses can be put in a virtual piggy bank for later use.
Even if you only register $ 10 a week in your microinvestment account, it could ultimately add $ 520 to your debt by the end of the year. And that changes little to nothing in your lifestyle.
There are still options if you can’t pay off your debt
If you feel that your debts are on you, don’t panic. There are always options available – even if you feel like you’re buried in a pile of payment requests.
If you don’t have the money you need to pay off your debt, you may have to make the difficult decision of filing for bankruptcy to pay off the debts you owe. Of course, this process has dire consequences for your financial situation and any future loans that you may wish to take out. But it can help pave the way for a fresh start. It is therefore important to remember that this option should only be viewed as a last resort.
It is important to know that no matter how high your debt gets, there is always someone to speak to and share your problems with. Sharing your problems with family and friends won’t go away, but it will help you gain a new perspective on your position. Of course, professional support is always available if you need it. Nobody should ever suffer in silence.