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How to Manage Debt

Debt can be the most stressful situation that any adult can face. Prolonged debt can cause stress and anxieties that can have serious impacts on physical and mental health, often causing depressive disorders and heart problems due to the corticosteroids that stress produces. It’s a sad truth that debt will touch most people – 80% of Americans are currently living with some level of debt, and over 50% of US adults have a negative net worth. Debt is truly epidemic, and if you’re living with that financial burden, here are some ways you can ease the strain on yourself.

 

Evaluate Your Situation

 

Often when your debt feels like an abstract problem, it can help write things down and make a list. This list should feature all the debts you owe, as well as regular payments for utilities, food and rent. Ensure you include details like the creditor, the total amount of debt, monthly repayments and interest rates. It can help make this list on a spreadsheet program like Excel, as you will find it easier to take a look at your deficit and try to work out where you can make savings. 

 

Prioritize Repayments

 

Once you have evaluated your financial situation, you can work out the most pressing repayments to make. Usually, the best solution is to pay off the debts with the highest interest rates first. Interest rates can be a difficult beast to understand, so make sure you’re clear on what they are first. If your situation is more stable, it might also make sense to pay smaller loans back first and start to cross some off your list. You must remember not to rob Peter to pay Paul – only pay off what you can afford. If you can prioritize them in a list order, you can integrate this into your spreadsheet.

 

Create a Monthly Calendar

 

Once you know where you stand,you should create a repayment calendar to help you start paying back your loans. Refer back to the spreadsheet you have made, as well as your prioritized list of repayments. Work out a realistic calendar for repayments over the next few weeks and months. Make sure you consider both your income and your monthly expenses to make sure you can live while paying your loans. Work out in which areas you can cut costs, for example, if you buy any pre-made food or drink (like takeaways or store-bought sandwiches), you can cut costs by only eating homemade food.

 

If you’ve never made a budget calendar before, try this link for a free printable monthly bill payment checklist template. If you want to create your own monthly budget and you’re not confident that you can, it’s easy to learn how. Remember – money can be difficult to get right, and there’s no shame in starting from scratch and learning or relearning the basics.

 

It is important to stick to your calendar not only to pay off debts but to make repayments. When more than one repayment is missed in a row, interest rates rise. It would help if you always tried to make the minimum repayment to avoid late fees and default (when a credit card is cut off), as this can make your problem worse. Make sure you factor this into your repayment priorities.

 

Ask for Help

 

It is all too easy for debt to get out of hand, and when this happens,you must ask for help. As previously mentioned, debt is extremely common in American households. Just because it’s prevalent, doesn’t mean you need to live with it. There are many ways of changing routines and improving situations, and one of the most effective ways is asking for help from professionals.

 

If you are facing debt litigation, you should seek expert debt lawsuit assistance, so you know your options and have the best representation.

 

If you’re regularly pressured for repayments, it’s worth remembering that you’re in a better place than you were before you created your repayment calendar and started taking control over your debts. Collectors will appreciate this, and it is always worth getting in touch with them and explaining your financial situation completely honestly. They may help to restructure payments in a way that you can afford.

 

You can also contact a consumer credit counselling agency. These are non-profit organizations designed to help people find a workable solution to their financial problems.

 

Create an Emergency Fund

 

Once you have created a healthy repayment plan and are confident you can continue making repayments, you can create an emergency fund. Even small funds can help you in future as they are an alternative to a loan.

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