The debt the average American household holds has grown substantially (nearly 11%) within the past decade. The averages are quite an eye-opener:
· Credit cards: $16k+
· Mortgages: $172k+
· Auto loans: $28k+
· Student loans: $49k+
· “Any-type” debt: $132k+
A major reason for this has been that the cost of living has outpaced income growth. In fact, many Americans are often one paycheck away from financial ruin. That’s very scary.
I’m like you. I have credit card debt, student loans, and other debt (taxes, medical bills, etc.) that has given me stress each time I wake in the morning. It’s not a fun thing to experience. It gets worse knowing that one or two more financial mishaps or accidents can lead to a lifestyle where I will forever be paying foward debts. I’m sure some of you reading are in the same boat.
The good news is that things are changing.
Many services are now available to help combat debt collection, tax liens, reduce rates, and forgive a great deal of the finances we have taken on (often against our will).
Miller Stark Klein, for example, is a shining example of how to deal with debt collection. They provide the financial education we’ve all been needing to fully understand what went wrong and what can be done to fix the issues.
This year, 2017, is a game-changer for me. It’s one where I feel I’m finally going to make significant progress in repairing my credit and knocking down the debt. I hope it’s the same with you. But first, we must start with the basics.
Let’s look at:
· How we end up in these financial situations
· What we can do to get out of the hole
· How to avoid falling back to old habits
Here we go…
Understanding Financial Woes (and Ways to Escape Them)
These student loans, credit card debts, auto loans, and mortgages are your typical financial debts that most people take on but these are to be expected. We all take on a little debt to live our lifestyles (within reason for the most part).
However – there are other areas that are out of our control such as an auto accident, medical procedure, loss of job, divorce, and the like. These are the things that really lead toward financial ruin. Having these tacked on top of our normal debts starts to destabilize our finances. Before long we’re under water and dug ourselves a hole that’s hard to get out.
Here are some of the various ways you can go about fixing the issues (whether they’re your typical debts or the unexpected ones):
· Create a Budget – You aren’t going to be fixing your budget anytime soon if you don’t fully understand the income in and expenses out. You need a budget. Creating a budget comes down to getting real with your finances, tracking everything, and using resources to find ways to save a little extra (to combat the debt) where you may not have seen before.
· Negotiate – Companies, debt collectors, and financial institutions want to be paid but they’re often willing to settle for a smaller amount because some is better than nothing. It would be worth your while to get in touch with whom you owe to see if they’d be willing to negotiate better rates or a lump-sum payment to knock the debt out in one swoop.
· Snowball – The “snowball effect” is the idea that you pay your smallest bills so that those smaller payments can build up and go toward the big ones. Assess which of your debts can be knocked down for quick wins (this helps with motivation, greatly) and then begin working on the next in line. Before long you’ll notice you’re making real progress!
· Reward Yourself – Like dieting – it’s hard to stick to a commitment when the only thing that seems to be happening is sacrifice. Be sure to take an ample amount of your income to go toward fun activities and investments so that you don’t go mad. Feeling as if your life goes toward paying debt can have a negative affect – it’s better to make the sacrifices but still enjoy living versus spending years feeling like you’re in the hole.
It’s going to take time, sweat, and tears – but eventually you’ll get there!
You can’t predict everything that may happen to disrupt your personal finance. There are situations where you find yourself out of the job, going through bankruptcy, in the hospital, or holding the bill due to an honest accident.
What we can do is get proactive with acting. We can implement strategies to help alleviate the pressures of our financial follies along with understanding what to look for in professional services.
What are your suggestions for escaping debt? Share your ideas, suggestions, and strategies with a comment! Let’s work together to knock down that debt!