While the situation can be described as grave there are ways out of it. If you are grappling with multiple loans it is time to stop and take stock. You must have seen situations where families end up losing their homes and sinking into poverty. It all starts with piling loans and as the pressure increases you are forced to default.
1. Talk to a Professional
Of course no one wants to talk to a stranger about their financial problems. However, you have to appreciate that credit counselors and other financial advisors have the expertise to help people struggling with debt. They treat any information you provide about your situation confidentially and are guided by a code of ethics. A debt counselor helps you evaluate your finances objectively and then helps build a solid budget to help you out.
2. Change Your Lifestyle
Desperate times call for desperate action. This might sound too extreme but remember if you don’t deal with your debt it might eventually lead to debilitating consequences. As such you have to proactively deal with the situation by embracing a frugal lifestyle.
Simple changes including avoiding eating out, looking for discount coupons, avoiding expensive hobbies, cancelling your vacation, selling your junk and cutting your credit cards can be a great start to handling your debt situation.
3. Use Balance Transfer
Your current loan interest rate might be depleting your hard earned money. In fact most of the money you end up repaying goes to service interest rates and not the principal amount. To avoid this, look for 0% promotional credit cards and transfer your loans.
This strategy works if you are very keen in repayment tom avoid penalties. There are always new credit packages being launched and you can greatly reduce the repayments.
4. Make Debt Management a Family Affair
There is no point of hiding the financial situation from your kids. Everyone needs to know how bad the situation is and the consequences if the status quo is maintained. Your family should chip in by reducing wastage and sticking to the agreed expenses. If the kids have credit cards withdraw them and explain this decision as this will go a long way to boost cash flow.
5. Debt Relief Options
You can either consolidate your loans; go for debt settlement negotiations or debt management. Debt relief programs are licensed to offer these services and consultancy services to people struggling with debt.
Dealing with debt is not easy and you have to be committed. Making it a team effort also helps meet your goals more easily. Additionally talking to a credit counselor will give you an objective view about your fiancés and new ideas on how to handle the crises.
Sheila Leslie is a financial writer based in Manhattan. She has previously worked in the industry as a loan consultant. She is also an avoid salsa dance r and a dotting mum.