When you’re in debt, it can take a while to recover. The first step is knowing that you have a problem. The fact is that many people in debt don’t even realise there is an issue. They keep borrowing and keep spending with the vague idea that when their situation gets bad enough, someone will bail them out. This just isn’t the case.
If you continue to borrow when you owe money without any thought to paying it back, your situation will worsen. You may have heard reports on the news about debt agencies cancelling the debt of individuals. This is typically because they have borrowed money from a firm or company that was offering unfair interest rates. They were facing legal issues of their own, and so they let their borrowers off the hook. You can not just assume this is going to happen for you. The fact is you might have found yourself in debt without ever borrowing from a loan shark.
Once you realise you are in debt, you will start to move towards recovery. But this can still be a long road. You’re going to face issues along the way that you won’t have encountered before. On this post, you’ll find some helpful guidelines on how to deal with them as well as solutions to avoid. Let’s get started.
Paying The Bills
When you’re in debt, you probably never worried about paying the bills. You might have just let them build up or worse, put them on credit. But now that you realize you have a problem you will understand you can’t just let the bills increase each month. Firstly, if you don’t pay the bills, you will damage your credit rating. Secondly, unpaid bills will lead to your amenities being cut off. How can you handle this issue?
The first thing you need to think about is cutting back how much you are spending on bills each month. One of the easiest ways to do this is not to switch the heating on. Rather than turning it on when you’re cold, just wear extra layers. You should also be limiting how much hot water you are using each day.
Have a quick shower in the morning and use the kettle to heat water for dinners and washing up. Avoid using the dishwasher, dryer and when using a washing machine, put it on an economic cycle. These little things will certainly decrease how much you owe on your gas bill. As well as this, you can consider how to decrease your electricity usage. Many people believe one of the best ways to do this is to switch the fridge and freezer off at night.
However, be careful with this idea. While it’s true your food will remain cold as long as the doors are kept shut; it take’s a lot of power to re-cool these appliances. If you do this, you may find that your bill will actually increase, and that’s the last thing you want.
Another issue of being in debt is that you might not be able to get the services you desperately need. For instance, you might be in debt because you were recently made redundant. In that case, it’s essential you have phone and internet usage. But, you may not be able to get these services if you have a bad credit rating. Luckily there are companies online that offer contract phones for bad credit. That way, you will have access to a service that could help you get another job and earn an income. But we should also think about other ways to deal with bad credit.
Coping With Bad Credit
A credit rating shows loaners how effective you are at paying back money you owe. This might be your home bills, credit cards bills or mortgage repayments. You don’t have to be in debt to have a bad credit rating. If you constantly forget to pay these bills on time, you will likely find your credit rating is poor.
Typically, you can fix your credit rating simply by paying off what you owe, cleaning up your borrowed money. It’s often recommended that you start with money left unpaid on credit cards. Ideally, you shouldn’t leave money owed on a credit card for more than a month. It’s easy to think this way when you’re not in debt but when you are, getting out of bad credit can seem impossible.
There is, however, a couple of options that you can consider. The first is to borrow money. This may seem ridiculous. But the fact is that if you can borrow money, you’ll be able to pay off high-interest loans. The issue is that you will only have access to bad credit loans. These too, often come with high levels of interest, leaving you in a catch 22 situation.
Instead, you can think about consolidating your debt, cutting it down into one easy to pay sum. This is useful if you have borrowed money from multiple sources. It can make getting out of debt simpler for some people.
One possibility you should dismiss completely is using payday loans. Payday loans should not be used by anyone but definitely not someone dealing with debt. Payday loans are only helpful if you know you can pay them off next month.
Buying Things You Want
The last issue to discuss is the change in lifestyle you’ll experience when you’re recovering from debt. You won’t be able to afford luxuries that you might have been used to. You may even have to cut back on the amount of good food you buy from the shops. In an ideal world, that might mean you would be eating healthier. But actually, if you look at prices you’ll find unhealthy food is a lot cheaper. However, there is a way to deal with the issue of not being able to afford what you want coping with debt.
You need to start planning a budget. It’s important that you know how much you can spend while continuing to pay off your debts quickly. If you do this, you should find you will be in the position to afford things you truly desire. As long as you are realistic with your goals you will still recover from debt and get out the other side.