Many people with bad credit or a high amount of debt or both can feel trapped or overwhelmed by their financial circumstances. Being in debt and having these feelings is a common situation in today’s economy; in fact, more than half of all households in the United States would be incapable of writing a check for five hundred dollars if a situation called for it. Credit card debt average in the U.S. stands at just above $16,000 per household, and this is the lowest category; higher types of debt include mortgages, auto loans, student loans and miscellaneous debts such as personal loans and more.
It’s safe to say that you are not unique feeling financial stress from debt, and many people just become adapted to the idea that they will have bad credit and never have the opportunity to buy a new car for the rest of their lives. But this does not have to be the case. If you have bad credit and significant amounts of debt, you will want to read this, because there are ways of repairing your credit and paying back your debt that won’t take the seven years necessary to get to the other side of bankruptcy.
Follow these steps, and you will find yourself in a far better position in just a couple of years. If you don’t like the idea of taking a couple of years to change your life and get out of debt, think about how long it took you to get where you are now. It’s always going to take some time to get out of debt unless you come across large amounts of money to take care of it all at once.
The circumstances of bad credit and high debt do not take a short time to occur. Whatever your story is – be it a series of unfortunate happenings in your life, or youthful financial indiscretion, or whatever – it can take a turn quickly. With these tips to pay off debt, you can repair your credit and dig yourself out of your financial hole.
Take These Step to Get out of Debt:
1. Face Your Situation
It may sound a bit obvious or even strange, but many people, while aware of their circumstances tend to mentally shove them aside and move on with their lives, stuck in a financial rut they are sure they cannot get out from beneath. Awareness of circumstances tends to be vague because knowing the details drive people to feel depressed or hopeless.
So, if you are looking to fix your situation, you need to face it, and NOT let it get you down. No one is suggesting you pretend to be happy about bad credit or debt, but we are encouraging you to face it with determination. If you are familiar with the ancient Viking legend of Beowulf, then you will understand that debt and bad credit can be the monster, Grendel, from that story. The people of the local village hid in their homes, hoping Grendel would go away until finally, Beowulf determined to slay the creature and rid his homeland of its terror.
Fighting the financial dragon is not easy, but it is possible. Examine your situation without fear – after all, it cannot hurt you further than it already has – and determine that you will emerge victoriously. Yes, this is a pep talk, but it is the best way to begin the task ahead.
2. Change Your Financial Habits
Chances are, you’re already living on a budget because you can’t get a credit card or a quick loan for bad credit. It’s not fun, but you can learn from your experience, or continue to live in it. It's harsh but if you are serious about getting out of debt, then what you need to do is stay in this mode of budgeting even after you begin to recover financially.
Many people, when they recover from their debt crisis, tend to fall right back into their old ways. Keep to your budgeting, get yourself debt free and rebuild your credit, and stay that way long after you’ve regained financial independence. Now, we don’t mean that you should live with lower standards because you were forced to while you were dealing with loans and bad credit, just make sure you live within your means, save some finances, and make better choices so that you won’t find yourself back in this situation again.
3. Take Action
Gather all your statements, including bills and any other debts you owe. Add up all the payments together and round it upwards to the nearest tenth. We understand that will seem like a huge amount and it might even amount to more than you make per month.
At this point, contact The National Foundation for Credit Counseling at NFCC.org, do not contact credit counseling agencies, they charge you more money and don't have an ability to fix your credit. NFCC will help you organize your finances, and they will work with your creditors to lower your interest, lower your payment, or any number of other solutions necessary to get yourself out of debt.
It is possible the counselor will advise bankruptcy as a solution. Do not be alarmed at this because Bankruptcy is a form of protection that will allow you to recover your life, even if it does take seven years. Again, do this with an attitude of determination and be prepared to make the necessary recommended changes that will get you out of debt and begin to restore your credit, this will help you work toward a better standard of living and a better life overall.
4. Consider a Second Method of Extra Money
We’re not necessarily talking about getting a second job, but do some research about your hobbies or things that hold your interest. For example, if you like to paint furniture, consider selling it locally for a few extra dollars a month. You would be shocked at how quickly you can make extra money and how much faster you can pay off debt with a reasonable second method of income.
5. Stick to It and Make Adjustments
When your balances begin to lower, consider making higher payments each month to accelerate the time it takes to pay off your debt. Then, stay with those methods long after you’ve cleared your debt and established your good credit once more.
Have Advice for a Debt Payoff Plan?
If you have any advice or would like to share your experience paying off debt, feel free to comment below. We do enjoy feedback. And remember if you need extra cash, CASH 1 offers loans including title loans and personal loans for people with bad credit. See us if you feel one of these services would be right for you.