Debt can be a terrible thing, causing no end of worrying and sleepless nights. In some cases, a simple case of credit card or loan debt can quickly escalate into unmanageable debt that the person simply can’t afford to pay off, and these situations sometimes end in bankruptcy.
If you have debt and you want to nip it in the bud before it can escalate and potentially ruin your life, you need to take action now. Here are six things you can do to wipe out or at least reduce your debt before it starts to take over your life:
- Find out exactly how much debt you’re in. Facing the reality of the situation is the only way to deal with debt, so sit down and work out how much you owe. This will also allow you to come up with a plan to repay everything.
- Get in touch with your creditors. Credit card companies and other lenders can be more sympathetic than you realize when it comes to debt, so get in touch with your lender if you’re struggling to make payments. There may be something they can do to make things easier.
- Seek independent debt advice. Speaking to an experienced and unbiased debt advisor can help you to come up with a plan to get out of debt, but you should never pay anyone for this service. There are plenty of advice services you can access for free.
- Use balance transfer credit cards to give yourself some breathing room. By shifting your debt from one credit card with a high-interest rate to a card which offers a 0% rate for a number of months, you can give yourself some time to clear the debt without further interest accumulating. There may be fees to pay when you apply for credit card products which offer balance transfers, so check these before signing up to anything.
- Stop spending on luxuries. If you have debt, you simply can’t afford to take a vacation or buy designer clothes. You need to restrict your spending to the bare essentials, such as food, household goods, and bills.
- Use your savings to clear some debt. If you have debt, you shouldn’t carry on saving. You should instead use your savings to clear your debt. This will leave you without an emergency fund, but it will only be for a short while until you can start saving again.