Many individuals and families have consumer debt, most commonly related to vehicles, homes, education, and medical expenses. While repayments can be manageable for most people, some struggle to meet their financial obligations due to life changes or spiraling debt levels they never anticipated.
Debt can be crippling, and many people can feel like there’s no way out. If you’re currently struggling with high debt levels, you can learn about the most common causes and how you can help yourself out of a financially challenging situation below.
Payday Loan Temptations
Many people seek help from financial experts like Doyle Salewski when they succumb to the temptation of a quick and easy payday loan and realize they can no longer afford the repayments.
Payday loan interest rates can be much higher than other financial products due to the lack of credit checks, causing a once-affordable loan to become exorbitant before long. Even if you anticipate being able to pay off the loan before interest starts accruing, that doesn’t always happen.
Job Losses
Even if you consider yourself proficient in money management and have a strict budget in place, a job loss can cause significant financial hardship. Without a regular income, you might struggle to meet everyday living costs and consider credit to rectify your shortfall.
While credit can be a suitable short-term solution for bridging financial gaps, it’s not typically a recommended long-term option. Credit card interest rates can be high, and your inability to secure a new job before a payment cycle ends might mean you pay considerably more than you initially spent. Over time, and without any way to pay down your job loss-related debts, you might end up with unaffordable debt that calls for expert intervention.
Money Mismanagement
Many people use budgeting apps and read budgeting books to help them manage their money and stay within their means. They learn helpful tips about the best methods to save money and how to make every dollar count. However, not everyone heeds the advice of financial experts or knows how to spend less than they earn. As a result, they can accrue debt that becomes impossible to pay down with skyrocketing interest rates.
What to Do About Your Debt
Some people find straightforward solutions to their debt problems, such as borrowing from friends and family. However, some people can have such high levels of debt that those options are no longer suitable. In that case, you might consider some of the solutions below.
Consumer Proposal
Receiving countless letters, phone calls, and emails from creditors regarding your dire financial situation can be overwhelming, especially when you’re not in a position to repay your debts just yet. With the right debt consolidation expert on your side, you might be able to apply for a consumer proposal.
A consumer proposal is applied for by debt consolidation businesses on your behalf and requests that creditors reduce how much you owe with specific arrangements in place. These proposals also halt your interest charges and ongoing phone calls regarding repaying your debts.
Bankruptcy
If you don’t have any money to cover your high-interest debts and it’s unlikely that you’ll have enough in the future, bankruptcy might be an option you consider. While it’s often a last resort, it can sometimes be the only solution for people in considerable financial strife. Before you start the bankruptcy process, talk to a debt management solution expert. They might be able to offer other options before you head down this path.
Debt Consolidation
Debt consolidation can sometimes be worthwhile when you have just a few small debts, such as personal loans and credit cards. This involves talking to a lender about taking out a single loan to pay off the multiple you have in place. When you negotiate a lower interest rate, you might find a single repayment much easier to manage than multiple each payment cycle.
Extra Income
When your debt levels are only beginning to become unmanageable, taking on an extra job might be an ideal way to ensure you don’t fall behind. Many people apply for side hustle jobs like work-from-home customer service work, data entry, virtual assistant work, and creative freelancing work like writing and graphic design. As many casual jobs allow you to work from home, you can fit in the work around your primary job and enjoy additional money without many extra costs.
People get into debt for many different reasons, and not always of their own making. While it can be daunting to realize you owe people money and have no way of paying it back, you might be surprised by how many repayment options and financial solutions you have.
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