It’s no fun living paycheck to paycheck. Let one little thing go wrong – a car repair, a medical bill or even overspending at Christmas – and you can find yourself racking up a lot of debt without even knowing it. You’ll find yourself banging down the door of the modern-day loan shark – the payday loan business near you like usaloansnearme.com You’ll spend $10 just to borrow $100 for two weeks, and then have to do it over and over and over again until that original $100 costs you around $250.
Still, there’s a way to end the cycle. It’s not easy, and it’s not an overnight process. Still, if you want to dig yourself out of debt as quick as possible, here’s what you need to do:
– Figure out what you owe. Make sure to write down the interest rates you’re paying on your debt.
– Set your priorities. If you really want to dig out of debt, you need to be committed. You also need buy-in from the rest of your household.
– Decide how much you can pay. At a minimum, you need to be able to make your monthly payments on your debt. That means creating a realistic budget, and it also may mean scraping and scrimping on some things for a while.
– Pay off your highest-rate balances first. This means you should pay off things like payday loans first, as they’ve got the highest interest rates.
– When you pay something off, put that money toward the next debt. Just because you don’t have to send $25 a month to your Visa card doesn’t mean that money shouldn’t go toward getting you out of debt. Add it to the debt with the next highest interest rate.
– Don’t accrue more debt. No matter how tempting it is, you have to get your spending under control and not take out any new debt. Cut up your credit cards, if you need to, and make yourself a promise not to get a payday loan.
– In some cases, your debt is going to be overwhelming. You might need to consider consumer credit counseling, or even bankruptcy. Most people will find, however, that they really do make enough money to get out of debt if they focus their efforts in that direction…
Bankruptcy is out there for a reason. It’s there so that people that can’t afford to pay their bills don’t have to go to prison.
You see, back in the old days, it used to be that you could go to jail just because you owed someone money. When Scrooge ranted about “prisons and poorhouses” in Dickens’ A Christmas Carol, he wasn’t bluffing.
Not too long before those days, in the old, OLD days, someone could actually “own” you and your family if you didn’t pay back a debt. You literally would become a slave until the creditor decided that you’d worked long enough to pay back what you owe.
Today, bankruptcy is preferable to jail or slavery. In fact, bankruptcy doesn’t even carry the same social stigma that it did just half a century ago. During the recent financial crisis, many respectable people have found themselves facing bankruptcy.
Bankruptcy eliminates many of your debts. To file, however, you’re required to liquidate your personal assets in order to pay off some of the debt. The bankruptcy trustee will actually sell the personal property, and then she will use it to pay your creditors.
There are some assets that are exempt, such as a percentage of your home equity. The laws regarding bankruptcy can vary greatly from one state to the next, as well.
There are some downsides to filing bankruptcy.
Among them:
Your credit history will be injured. It’ll be hard to get a loan, mortgage or credit card. It will stay on your credit report for as long as 10 years.
Your loan rates will be higher. When you do get a loan, expect to pay more for it. The exception is a payday loan, which has astronomically high loan rates anyways and generally isn’t based at all on your actual credit history.
Your retirement accounts may not be protected. Some retirement assets like 401(k) accounts are protected, and so is up to $1 million in an IRA. However, the law requires that only those assets needed to support a filer and dependents are exempted, so you may only be able to keep a portion of an IRA account.
Bankruptcy isn’t easy anymore. The Bankruptcy Reform Act of 2005 made it harder to file for bankruptcy and added more types of debt to the list that can’t be filed on.
There may be alternatives. You might be able to negotiate with a creditor or even work with a credit counseling service. Make sure to explore all of your options before you commit.…