Debts can be caused by various reasons, and once they pile up, discussing ‘Why’ should be the least of our concern. It is more important to think of the solution, rather than to think about the reasons for the problems. There is nothing we can do anymore about what has been done.
Getting overwhelmed by debts might show subtle symptoms, such as tight income and excessive credit card deduction. The impacts might not go to you directly, but in the long run, you cannot allocate your budget to save for retirement or to have investment. Once these symptoms occur, it means that you have unmanageable debts which require immediate attention.
Here is the guide for you to deal with those debts.
List your debts
The first step you must do if you want to pay off your debt is to know which debt is the most overwhelming. Check the one that has surpassed payment deadline and had the most penalty interest. Calculate how much you make per month and see if there is a chance for you to manage to pay your debts off.
List your valuables
Do not preserve your valuable stuff. If you do not want to lose your valuables, you should not have made the debts in the first place.
Make a list of your possessions from the most to the least expensive and sell them immediately. It is better for you not to be able to watch TV anymore but you can get some of your debts covered.
But it is important not to sell all of your valuable belongings at once because it might drastically reduce their values. Try to calculate how much you can get from selling the valuables together with how much money you can get from a monthly salary. Find out if both sources can cover your debts.
Consider applying for debt consolidation loan
Debt consolidation loan is intended for those who have no other ways of paying off their debts. In other words, it is a finance program for those who owe money more than they can make.
Debt consolidation loan gathers all of the debts into one place, and allow the debtor to pay them with ease. But this loan has very high interest. The creditor will still look at the applicant’s portfolio. If there is a history of bad credit, then it will be unlikely for the applicant to get a consolidation loan.
Do not be afraid of making more debts in the future
To establish a company or to gamble with a potential investment might cost us money more than we can afford. Getting a loan is the most common way for an entrepreneur to get a fund. In conclusion, there is nothing wrong with applying for a loan. But what should be carefully thought of is how to manage the debts properly.
Good credit will lead to easy loans while getting bad credit is like being black-listed by the banks. When you have unmanageable debts, big chances are you are getting bad credit. And paying off your debts alone will not bring you a good debtor reputation. You should prove yourself as a worthy debtor by getting a loan again, but this time, you should manage it carefully.