March 19, 2017
This article explains the top 7 strategies you can use to reduce the stress of your debts and getting your debts under control. As a bankruptcy law firm in Hartford, our primary goal it to get you completely out of debt, and at the same time provide tips that will make the process easier for you.
The Side Effects of Being Debt
Debt is considered one of the biggest life-events that causes stress. What this means is that those who know they have debts hanging over their head always have their debts as a reminder lingering in their day to day thoughts. Living with this daily reminder is not a healthy way to live, and can unnecessarily take your focus off the important things in your life. Being in debt can negatively affect your sleeping habits, cause marriage issues, hinder you from getting good credit and virtually put your whole life on stand-still while you’re continually living check-to-check and not being able to save your money.
Below is a summary of our top 7 debt stress reduction tips:
- Spend Money on What You Need
- Don’t Spend Money You Don’t Have
- Put Away a Few Bucks a Month for Savings
- Prioritize Your Debts
- Consider Getting Credit Counseling
- Ask For a Lower Interest Rate
- Consider Selling Things You Don’t Need
1. Spend Money on What You Need
One major way to get your debts under control is by purchasing only things that you need. When you’re in major debt it’s certainly not advisable to go on expensive vacations or buy a new car. This goes with the small things too. For instance if you don’t really need new socks or pants, don’t buy them. If you can wait until your debts are better controlled or even gone, then wait. You’ll be happy you made these small sacrifices instead of living in debt for years and years to come.
2. Don’t Spend Money You Don’t Have
This is a clear-cut suggestion to completely stay away from using credit cards while you’re in debt unless you are in dire-straits or an emergency situation. Credit cards have fees and interest costs and using them will only increase the amount of money you have to pay on your debts at the end of the month. The long story short is that when you’re in debt, and paying your debt off monthly, you don’t want to add more debt to your plate. In the end this form of sacrifice will pay off and reflect better on your credit report.
3. Put Away a Few Bucks a Month for Savings
If you’re following the advice in the two points above, you’ll actually find that you’re about to save a lot more money a month that you were able to in the past. After about 6 months of putting away a few bucks a month into your saving account, you’ll feel a whole lot better about your financial situation, and you’ll feel proud that you’re able to responsibly build up your savings account. Remember it doesn’t matter if you’re putting away 10 dollars or 50 dollars, as long you’re putting something away you’ll feel like you’re actually accomplishing something which will positively affect your bottom line. That feeling will substantially reduce the stress of your debts.
4. Prioritize Your Debts
This debt reduction strategy is the easiest but it takes a little bit of organization. Get a pen and a piece of paper out. Write down all your debts from top to the bottom of the page, and most importantly in order of importance. Obviously a vehicle debt will be more important than a debt to your cable company, and a credit card debt could be more important than the debt to your dentist. In any case the first step is to prioritize your debts into a list and then create a second column.
In the second column beside each debt item, list the amount you’re willing to or able to pay each month. At the end of each month (or which ever day you pay off your debts) start with the top-most debt and pay down your list.
Approaching paying your debts through prioritization enables you to get your important debts paid off as quickly as possible and leaves you with room to put off paying some less important debts during months that you don’t have enough income. Once the more important debts are completely paid, you’ll have money left over to pay the smaller debts, and even put some of your money into your savings account if you like.
5. Consider Getting Credit Counseling
One of the most effective ways of learning how to reduce the stresses associated with debt is through credit counseling. Credit counseling will provide you with all the tools you need to manage your income and expenses, and the strategies are presented to you in simple but highly effective terms. It can also be one of the best ways to help you avoid bankruptcy as long as you put the strategies to use.
6. Ask For a Lower Interest Rate
Now that you’ve prioritized your debts as explained above in point 4, you can actually take a swing at contacting your creditors and asking for a lower interest rate, or even ask them to reduce your debt. Contrary to popular belief, creditors are always mean people and if you explain to them that you’re eagerly trying to get out of debt and would like to pay off the debt you owe them as quickly as possible, they may accept your request at lowing your debt or interest rate if you promise to pay it off quicker. You can work with the creditor to find terms that work for both of you but your objective is to lower the debt or its interest and getting it paid off as quickly as possible.
7. Consider Selling Things You Don’t Need
Another great way of reducing your debts and/or saving extra cash to put down on your debts or put away is by selling off items in your home that you don’t need anymore. You may have some antique items that would sell for a pretty penny, or just a bunch of things in your basement or attic that you simple don’t use anymore. All you need to do is take an inventory of those items, take a picture and post it on a site like Kijiji which will enable you to find buyers completely free of charge.
You can start by selling only 10 items and after you’ve sold those things off and have reaped the benefits, you can start another sell off of other items you don’t need anymore. Remember that once you start getting paid don’t get too exited except for the fact that you’ll be able to put that money towards paying off a debt that’s been bother you.
Bonus: Consider Bankruptcy
There sometimes comes a time when a person’s debts are too much, and filing bankruptcy is the only way to get it under control. If you feel this is the position you’re in, there’s no better time than the present to consider bringing your case to a bankruptcy lawyer and figure out what your legal options are. Contrary to popular belief, declaring bankruptcy is not a negative, but instead it’s a useful tool available to those who wish to remove their massive debts legally.
The Take Home
The point of this article is two-fold. One is to show you that being in debt doesn’t have to always be stressful, and that getting your debts under control is actually not that difficult. As long as you approach your debts with a positive outlook and take some of the points laid out in this article into consideration, you’re bound to be on your way to financial freedom in a shorter period of time than if you had let your debts overwhelm you. The choice is yours.
March 19, 2017
The loss of a job can bring a variety of challenges and stresses. Of course, after losing a job your primary concern is getting back into the workforce as soon as possible. But in the meantime, you will likely need to take some proactive steps to minimize your debt until things turn around for you. Read the following article which provides great tips on debt management, and help you discover ways of paying down debts after job loss.
Make An Assessment of Your Current Finances
For example, one of the first things you can do is fully assess your current finances. You can look closely at all of your expenses and begin to trim those which are not necessities. In other cases, you can actively seek to reduce the costs of certain services, such as your cell phone by switching to a cheaper plan, or finding more competitive auto insurance.
While on their own, each individual cut may not seem like much at all but taken all together you could see some meaningful savings. If you save 5 dollars on 5 services, that’s $25 per month, or $300 a year.
If you find certain perks that are costing you monthly, getting rid of them can help you save enough money which you could be put towards your current debt until you find another job.
Take Advantage of Unemployment Benefits
Don’t be afraid to take advantage of the unemployment benefits to which you are entitled. But be sure you get in touch with the unemployment office as soon as possible because it takes time to get your claim processed. Obtaining monthly unemployment benefits will be one income stream that will help you stay above water and depending on the amount you are entitled to receive you can continue putting money down towards your debt.
In a best-case scenario, you will be able to ride out the storm and start to chop down your debt when you are once again employed. However, if the amount you owe your creditors becomes insurmountable, you can file for bankruptcy which will help you develop an effective debt relief program so you can get a fresh financial start.
Seek and Research the Right Financial Advice
Debt is stressful, it can impact all areas of your life and it often feels overwhelming especially if you lose your job. It’s important to know what to do about the debt and to understand how you can prevent future financial problems.
Below are a few different pieces of advice that may help:
1. Learn to Budget
The biggest thing that many people overlook is the important act of creating a budget. You’ll be shocked to find out how much you “accidentally” spend on a monthly basis especially if you’ve audited your spending habits.
2. Cut back on what you don’t need
There are plenty of frivolous ways that people spend money – many of which have far less expensive alternatives. For example, maybe you spend $3 per day grabbing a coffee on the way to work, when you could brew it at home for just a few cents per day. You can also seek cheaper gas. There are many websites and apps to let you know which gas station in your area that provides the cheapest gas. Over a period of a year, you’ll realize that all the little things add up and that saving those pennies really can make a difference.
3. Identify expensive debts
How expensive your debt is depends, to a large degree, on the interest rates. It’s often wise to pick those high-interest debts to eliminate first, since they’re adding the most new debt every month. Tackling your largest debts and getting them under control first is a great feeling and tends to make your other lesser debts appear meaningless or much easier to pay off – and they are!
4. Be honest with your spouse
If you’re married, don’t lie about your financial situation or try to hide the issues. Be open and transparent. Have that uncomfortable conversation. This way, you can both make changes and work together to find a solution.
5. Be careful with your credit cards
One tip is to keep careful track of your income and your expenses. Credit cards should not be used casually, as though they are an infinite source of spending money. They are not. When credit cards are used casually, without tracking income and expenses, the balances due increase, and with them, the interest that you have to pay.
6. Research your options
Above all else, be sure you understand all of your legal options for debt relief. In some cases, this could even include bankruptcy, which can provide you with a fresh start, and in other cases you can highly benefit from debt consolidation or debt settlement services.
These are just a few ideas that can help you stave off debt as you search for that new job but if you were already carrying debt prior to becoming unemployed, it is very easy to fall into true financial hardship. This is why when job loss occurs you need to really clamp down and spend the next few months doing everything you can to fix your financial situation. Do not ignore the position that you’re in because if you do it’s only going to get worse, and eventually come back to haunt you. You know this.
7. Speak with a bankruptcy attorney
If you’re debts are beyond manageable, it’s advised that you seek a free consultation from a bankruptcy attorney. Many people that have experienced debt, and have decided to seek the services of an attorney, have found that they were finally able to start saving money after bankruptcy. Remember, if you file bankruptcy, consider getting a secured credit card to increase your credit score after bankruptcy.
Practice Budgeting & Financial Planning
Most people experience debt problems of some kind within their lifetime. Correspondingly, most people can gain value from good debt management practices.
It may seem time-consuming, but it is best to write down all of your expenses and all of your income in a ledger, along with the amount of interest that you need to pay. That way, you will always know how much you have and what you can afford to pay for. Both amounts may be less than you would like, but at least they’ll be realistic.
Additionally, you’ll want to put together a budget. First, list your income from all sources for each month. After that, list your necessary expenses, like your home, utilities, groceries and health care.
Once you’ve done that, you’ll be able to look at what is left of your income for each month and determine how much you want to save and how much you will spend on unnecessary items, like entertainment. When planning to do some spending with a credit card, you’ll also need to figure out how much interest you’ll be paying and include that in your budget.
You’ll also want to include payment of debts in your budget. Some people like to pay off the highest-interest debt first, because that is the one that will keep draining your resources the most until it is paid off. Others may choose to pay off a small debt first, perhaps one associated with a necessary service like phone or internet services.
Once you decide on an approach, stick with it, and enjoy seeing your debt get smaller and smaller as you pay it off.
Most consumers may run into credit problems from time to time, whether due to excessive spending or insufficient earning. When that happens, it is important for the consumers to know how long they will be adversely affected by those credit problems and the debt management strategies they can avail themselves of.
Try to Pay Off Debts Quickly
If you miss a payment that you owe, and are 30 days or more late, that is a delinquency and can be added to your credit record. It is good to avoid delinquencies in the first place by keeping track of when your bills are due and paying them early; however, if you do have a delinquency, the best thing to do is to pay it immediately. You may be able to get the company to which you owe the money to drop their late fee in return for you paying as soon as you agree to do so.
Use 30 Percent or Less of Your Credit Limit
High credit utilization – using a high percentage of your credit limit – can also be a negative on your credit record. For that reason, it is best to only use 30 percent or less of your credit limit. If you use too much though, and then pay down your balance, the problem should be overwritten a month later since balance updates are sent to the major credit card bureaus by credit card issuers each month.
Account charge-offs, however, will be on your credit report for seven years. Account charge-offs happen when you fail to pay your debt to the person or entity to which it is owed in accordance with the agreement that you made with them. You can pay of that debt in full, or negotiate a settlement, which will preclude the risk of being sued for the money.
Create an Emergency Fund
When it comes to job loss, not having an emergency fund that has enough cash in it to cover all of your living expenses for six to 12 months, could damage your finances enough to put you into a financial whirlwind. Therefore, if your job is less than 100 percent secure, cut unnecessary expenses and start saving everything you can until you have that six- to 12-month reserve fund. Not making that happen is a bigger risk than anyone should be willing to take.
Your financial planning should also involve saving as much money as you can. Putting a regular amount into a savings account every time that you get paid is one of the simplest things that you can do and also one of the wisest. Doing your taxes early is good idea too, so you will know how much you have to pay, how much you can save, and how much you can spend.
In a related challenge, which is another good reason to save as much money as you can every month, is that even if you keep your job, you may find yourself with less work hours and thus with less work income. This happens to people all the time when companies find themselves with less revenue and immediately look at what labor hours they can cut.
Employees that do great work can make a case for keeping all of their hours, at the expense of employees who don’t do great work, but often cuts hit everybody so again it’s wise to always be prepared for them.
Don’t Continue to Run Up Debt
After losing a job it’s highly advised not to continue running up your debts. Some, like those associated with unexpected medical expenses, may be unavoidable, but others however, like credit card bills, are very avoidable so consider using a debit card instead and only spending what you actually have, with even that being very carefully budgeted.
Reduce the Chance of Identity Theft
It’s wise to determine how susceptible you are to identity theft. In 2017, one of the largest credit bureaus in the country, Equifax, was hacked into which exposed the private personal information of up to 145 million Americans to criminals. Some Americans froze their credit because of that. Others, however, did not.
Those who did not may have presumed that if they didn’t experience any apparent problems from identity theft right away, that they wouldn’t experience any later either. However, they may find out the hard way that they are wrong.
A good rule is that if you believe that there is any possibility that you may be a victim of identity theft, you should take every possible measure to protect yourself right away. A part of that task is checking your credit report for suspicious or incorrect information. Another thing you can do is to change any insecure passwords you may have.
The Take Home
When it comes to job loss and being in debt, it’s not the end of the world, but If you find that your debt is simply too overwhelming to handle, bankruptcy might be your best option. A bankruptcy attorney can provide you with additional information and help you determine if this is the right choice for your financial situation to do everything you can to stay afloat but if it becomes to hard, find a trust bankruptcy lawyer in your area and get the help you need from them.
March 1, 2017
Credit card debt levels are skyrocketing to levels not seen since prior to the 2008 Financial Crisis. As CNN reports, the average household is now carrying $15,654 in credit card debt. What is even more alarming is that most Americans are using their credit cards not necessarily for frivolous expenses like eating out or clothes shopping, but simply to make ends meet.
With interest rates set to rise, credit card debt is about to become a lot less manageable for many households.
Furthermore, with the average household currently paying more than $1,000 per year in interest alone on their credit cards, the financial strain will likely get worse in 2018 as the Federal Reserve has indicated it will continue raising interest rates.
Necessities Drive Credit Card Debt
As CNBC reports, a recent survey of 1,000 consumers found that the most common reason people went into credit card debt was in order “to make ends meet,” which was cited as a reason by 42 percent of respondents. Car repairs came second, at 29 percent, and medical bills third, at 27 percent.
Those responses suggest a couple of troubling conclusions: one, that basic necessities are driving people to get deeper into credit card debt and, two, that many Americans don’t have enough savings to cover unexpected expenses, like medical expenses, when they arise, forcing them to put them on their credit cards.
The problem is likely due to the rising cost of living. Medical expenses alone have shot up by 32 percent in the last decade, while food and beverage costs have gone up by 22 percent. As a result, many Americans can neither afford to save up money to cover unexpected expenses and must rely on their credit cards just so that they can meet their basic necessities.
Things Look Likely To Get Worse
Credit card debt represents only six percent of household income, but because credit cards come with such high interest rates they can quickly turn into an unmanageable problem. Currently, the average household spends nearly $1,333 per year on credit card interest alone, assuming an average interest rate of 19.36 percent.
Given that the Federal Reserve has already begun raising interest rates and is expected to continue to do so into 2018, the amount people are spending on credit card debt is likely to keep going up. For those who already rely on their credit cards to make ends meet, rising interest rates could prove too much to handle.
As a bankruptcy firm, we also expect to see an increase in people declaring bankruptcy to stop their credit card debts in order to put an end to their debts constantly increasing or so stop legal action taken against them.
Getting Out of Debt
Debt can quickly feel overwhelming, especially when you’re struggling to keep up with minimum payments and dealing with harassing phone calls from creditors. One way to address the problem may be to consider bankruptcy.
If creditors are harassing you, read out advice on stopping harassing creditors for ways to make the phone calls and letters stop.
A bankruptcy attorney can show you how bankruptcy may be able to stop the endless bill payments and harassing phone calls and give them the breathing space they need to rebuild their finances.