While debt has long been a marvelous tool with the ability to enhance and propel individuals up the pyramid of life, it can be just as devastating to those who are unable to manage finances wisely, eventually ending up in a crippling cycle of debt.
Even minimal debt can be overwhelming, weighing down on your goals, dreams, and freedom for years to come, and as such coming out from under a mountain of debt can take sheer will and commitment, which remain scarce among most people this day and age.
In order to break free from a crippling cycle of debt, it often takes more than just personal effort, or tenacity, with external interventions, and professional services capable of adding tremendous value in this regard.
Get On Top of Your Finances
Before kickstarting any debt reduction, or personal finance endeavor, it is pertinent to get a thorough overview of where your finances stand at the moment. This includes assets, income, liabilities, and a deep-dive on each of them, consisting of the APRs, terms of the liabilities, and more.
There are a number of templates, frameworks, and apps to aid you with this, helping provide a complete picture of your finances based on the data provided. Your entire finances have to be laid bare, including bills, and lifestyle expenses, to clearly understand where money is coming from, and going out.
Plan Your Journey
With a clear picture of your finances, you can take several approaches to get debt-free at the earliest. If you find there is no room in your budget for accelerated payments, you might consider getting a second job or altering your lifestyle to reduce expenses. Similarly, there are different ways to go about debt repayments to maximize long-term results.
The ideal approach would be to target high-interest debt; first, non-deductible debt coming in next, followed by low-interest and tax-deductible debt coming in at the end. This is called a debt avalanche approach. In contrast to this strategy, there is a debt snowball, which involves paying off debt in order of smallest to largest balances to reduce the number of creditors at any given time.
Consider Debt Consolidation
Dealing with multiple creditors, their individual terms, fees, and collection teams brings with it a great deal of friction. This can further exemplify stress and as a result, leave individuals unable to get things moving.
The perfect solution in this regard is debt consolidation, which involves taking a loan to pay off all others and limiting debt repayment to a single monthly installment.
There are a number of debt consolidation programs that offer lower interest rates, lower monthly payments, or better terms, all of which stand to substantial value for individuals who are looking to transform their personal finances.
While it’s mostly banks or credit unions that offer such services, there are even credit cards, such as the SoFi credit card, that can be availed for debt consolidation.
Hire A Credit Counselor
If you feel stuck in an impossible situation and feel that none of the above measures can come to your rescue, an ideal approach would be to engage a credit counselor to help you with your case.
A credit counselor is an experienced professional who can provide you with many helpful tips, all the while helping you negotiate better repayment terms or even debt relief with creditors. These individuals or organizations don’t lend or help in payments themselves but bring a much-needed professional presence to the negotiation table.
No matter how deep you are in the cesspool of debt, there are plenty of avenues to work out and get your life back on track.
The measures mentioned above should help provide certainty, but it ultimately comes down to how well you can stick to your guns and stay on track to pursue your goals.
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