Dealing With Debt? 4 Steps To Help You Get Back On Your Feet
Debt is no laughing matter, especially when you're drowning in it. Once you fall behind on your monthly payments, it can be difficult to get caught up again. Unfortunately, late payments include higher interest rates and penalty fees, which can make it even harder to make your payments. Pretty soon, you're caught in the endless cycle of debt. If you can't get out from under your debt, it's time to take matters into your own hands. Here are four steps you can take to get out from under your financial burden:
Make a Budget and Stick to It
Debt can sometimes be caused by overspending. Simply put, you spend more than your budget can handle. If you have more money going out than you have coming in, you need to reduce your spending. The best way to do that is with a budget. Sit down and list all your bills. Divide them into bills that you must pay and bills that are for luxuries, such as pedicures, dinners out, and entertainment. Once you've listed all your bills, then list all the money that comes into your home each month. If your bills outweigh your income, it's time to cut back on your spending. Begin with the bills that you don't need to pay each month (the luxuries). Once you have your budget, stick to it.
Don't Avoid Your Creditors
As soon as you know that you won't be able to pay your bills, you need to contact your creditors. Don't wait for them to start hounding you. If they've already begun calling you, take the time to talk to them. If you explain your current financial situation, they may be able to set up a payment plan that will help you get back on track.
Take Out a Debt Consolidation Loan
If you've fallen behind on your bills due to an emergency situation, such as divorce or medical problems, a debt consolidation loan may help you out of your situation. Debt consolidation loans are consumer loans that allow you to pay your bills off, and consolidate them into one manageable monthly payment. It's important to note that you should avoid going into debt again after taking out a debt consolidation loan. If you're faced with another emergency situation, you may find yourself falling behind on your loan payments.
Consider Credit Counseling
If overspending has caused your current financial crisis, it might be time to consider credit counseling. Credit counseling services are non-profit organizations that help you learn how to manage your money and stay out of debt. If you find a credit counseling service that isn't non-profit and wants to charge you large sums of money up front for their services, you should look for another organization. Reputable credit counseling organizations provide free, or low-cost services.
Contact a company like MainSource Bank for more information and assistance.