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Changing Your Relationship With Debt

Debt can be a terrible burden to have to live with. What can start with a small amount on an overdraft can slowly snowball into tens of thousands owed to various different companies. Pretty soon, you will be juggling a whole host of repayments to several loan companies. 

Debt can lead us to make some pretty poor decisions with our lives. It can make us desperate, and in the worst cases, can cause us to turn to crime to try to solve our problems. The cycle of debt can also cause severe problems when it comes to your relationships. The stresses and strains of harboring a large amount of financial weight can bring us to breaking point with our loved ones. If the debt is shared, not dealing well with the stress can create cracks. But if the debt is primarily on one partner, this can cause a whole different set of tensions. In many cases, people choose to hide their debts from their partners, and this will only lead to a feeling of betrayal and mistrust. 

Debt can tear families apart and put people on the streets. And, if you are in any way struggling with debt, you should take immediate action to stop it from ruining your life. This can be hard to do, and you may not know what the best course of action might be, or who to turn to for support.

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Getting The Help That You Need With Debts

In the first instance, when it comes to dealing with personal debts such as loans, credit cards, or student loan debt, you should reach out to a friend, family member, or partner and ask them for help. To be clear, this does not mean that they should lend you money. Quite often, taking a loan from someone that you are close to can be problematic as it may lead to arguments. It is only useful if it is a meaningful amount of money that can be used to clear entire debts. Otherwise, it is often just adding to the problem. 

The type of help that you will want to get is emotional support and constructive advice. Being able to talk to someone about your money problems will be vital as it can help you feel as though you are not alone. 

If you have a partner, make sure you involve them in the situation. They have a right to know about the problems that you are facing, even if they do not directly affect them, it can still be a cause of great tension in your life, and they need to be able to support you through it. 

Seeking Support From Debt Charities

To get support, you should reach out to the citizen’s advice bureau, or a debt charity such as Step Change. Having help from people who are trained to deal with your specific problems will be greatly beneficial to you and your situation. 

They may be able to signpost you towards a robust solution so that you can start to overcome your situation. There may be ways things that you have not thought about doing that can help immensely. 

If you have a complex relationship with managing your money or the stress of your situation is weighing down on considerably, then you might need to talk to a counselor who can help you to process the problems that you are facing. 

Restructuring Your Personal Finances 

One of the primary ways that you can fight debt in your life is to change the way that you deal with your finances. You may be in the habit of ignoring the money that you have going out because it causes you stress or anxiety. This is perfectly natural, and this is a defense mechanism that you will have developed. Unfortunately, it is not terribly helpful getting you out of debt and could, in fact, cause your problems to worsen.

Getting ahead of your debts will mean understanding where your money is being spent every month. For this, you will need to create a full and thorough assessment of your income and expenditure. You should ensure that you do need to leave anything out and be fully honest with yourself about what you are spending money on. Denial will only worsen your situation. 

Start with your most essential outgoings first. This will be your mortgage or rent payments. This will be outgoing that you probably cannot do very much about, but it is important that you prioritize paying it. 

Next up, look at things such as your utility bills. Your gas, electric, water, phone, and broadband. You may be able to lower your consumption or switch suppliers for many of these things. So, shop around and make the switch to the company that offers you the best deals. Make sure that if you are on a limited offer, that you understand the terms and look at switching again if the prices start to rise. 

Your debts should obviously be on the list. You need to pay these every month so that you are not going to get further into the financial black-hole. More on how to reduce the payments on these later. 

Then you will get to your non-essential spending. This will include items such as satellite and streaming subscriptions, gym memberships, as well as memberships to clubs. There may be things that you are paying out for that you don’t even remember that you have. These are prime examples of things that you should cancel in order to save some money. 

Setting yourself budgets for your food shopping is a good way of managing your money. Have a look at home much you are spending on average each month and try to use that as a basis for planning. Think about areas of your shop that you are spending too much on. Are you buying branded items, when an own-brand product would be much cheaper? Get yourself into the habit of shopping in a more savvy manner will mean not picking up impulse buys and working off a shopping list. 

One way of managing your spending is to spend more time planning meals. If you are cooking from scratch, and also have a plan for your meals each night, you can use cost-effective techniques to get ingredients that can be used across a number of meals so that nothing gets wasted. 

Keep in the habit of documenting and tracking everything that you are spending. It may feel completely unnatural to you, but doing this will teach you to control the way that you use money, Building a new relationship with your finances takes time, and eventually using spreadsheets and checking your online banking regularly will feel natural. 

Restructuring Your Debt

One way to deal with the debt that you have currently is to take out a consolidation loan. If you have multiple debts, you will have a few different interest rates. Some of your debts may be more pressing than others, and you may constantly be juggling them. When it comes to paying them off, you will probably not get to pay them all off as there will always be one or two of your debts that keep escalating because you have too many to manage. 

Taking out a consolidation loan will mean that you can put all of your debts into one easily affordable monthly payment. This will make the overall debt much easier to manage. 

Once you have paid off all of your other debts with your consolidation loan, you should cut up your credit cards and close the accounts so that you are not tempted to go back into more debt. 

Worst Case Scenarios

If your debt has gone too far, you should get in touch with a firm that can negotiate with your lenders to agree on a settlement. Doing this may mean that you can avoid filing for bankruptcy, while also giving you the opportunity to clear your debt in a more manageable manner. 

The lender may agree to cut some of the debt for you. There will be an agreed-upon payment plan that will be easier for you to manage in your current situation.  

Nobody wants to file for bankruptcy, or have any court judgments hanging over them because they have failed to pay a debt. Getting in there early and discussing your options with a company that can renegotiate your position may be greatly beneficial to you. 

Getting out of debt may well take you a great deal of time and effort. It will need you to remain focused and change your way of thinking about money. It is possible to get out of debt, though, and although it may feel as if it is the end of the world when you are tangled up in interest and loans, it can get better. Reach out and get the support that you need, but most importantly, work at yourself in order to improve your own relationship with money and debt. 

When You’re out of Options: 5 Myths and Facts About Declaring Bankruptcy

When debts grow out of control and you simply cannot make ends meet, bankruptcy is sometimes the only option. While bankruptcy is not an easy way out, it can help you legally overcome your debt and improve your financial outlook. Unfortunately, there are many bankruptcy myths that are perpetuated. Understanding these myths will help you to fully understand the truth regarding declaring bankruptcy.

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Types of Bankruptcy

There are multiple types of bankruptcy that can be filed, though there are two that are more common than others. Chapter 13 is often referred to as the “wage earner’s bankruptcy” because you are required to pay monthly payments. When people file for bankruptcy, they sometimes hire a lawyer to help.

Chapter 7 is best for those who have mostly unsecured debts. The process can typically be finished in six months or less, though you may be required to submit non-essential assets for liquidation to pay off the debts you owe.

5 Myths About Declaring Bankruptcy

As with most things, there are always those who spread falsities regarding bankruptcy. Unfortunately, bankruptcy is still considered a somewhat taboo subject, even though millions have filed. The following are some of the biggest misconceptions regarding declaring bankruptcy.

1. One of the biggest myths regarding bankruptcy is the individual will lose everything. Many people mistakenly believe filing for bankruptcy means they will have to give up their house, car, and all assets. For most people, Chapter 7 is a non-asset bankruptcy, so you do not give up anything.

2. Many people also believe the myth that all their debts will be wiped out by declaring bankruptcy. There are some types of debt that are not forgiven in bankruptcy, including student loans. Debts you are personally responsible for are generally not forgiven.

3. The belief that filing for bankruptcy means you are a big failure is truly erroneous. Many people believe they are admitting failure if they file bankruptcy. Most people end up filing bankruptcy because of a loss of wages rather than poor financial management.

4. A common myth that never seems to die down is the belief that your financial future will be ruined by bankruptcy. Although you will certainly have limited access to credit for about ten years, your credit score will likely begin to see improvements shortly after your bankruptcy is declared. Filing for bankruptcy is not the end of your future.

5. Some people mistakenly believe it would be better to pay off their debts than file for bankruptcy. If your debts are greater than 50% of your income, it would be wise to at least consider declaring bankruptcy because paying off the debts will be difficult.

Benefits of Declaring Bankruptcy

· Takes away a great deal of stress

· Can prevent foreclosure

· Allows for a fresh start

Although it is not right for every circumstance, there are many benefits to declaring bankruptcy. Most people find it easier to consult with a bankruptcy lawyer before they make a final decision.

Conclusion

Declaring bankruptcy does not mean you have failed and it certainly will not ruin your financial future. Taking the time to learn about your bankruptcy options will help you to make the best decisions for your needs. Bankruptcy will help you to overcome the vast majority of your debts and give you peace of mind in knowing there is less financial stress.

Saying Goodbye to Debt: Do You Know These 4 Alternatives to Bankruptcy?

If you’ve got major debt problems – you might think your only option is to file for bankruptcy. It can be a hard step to take, but for some, it’s the only option. However, that isn’t always the case. Did you know that there are a number of different options for you even if you think that filing for bankruptcy is inevitable? In this article, we’re going to look at them. Make sure you’ve exhausted every possible option before you decide that bankruptcy is for you.

Saying Goodbye to Debt: Do You Know These 4 Alternatives to Bankruptcy? - empty wallet image

1. Get a debt consolidation loan

While it might not be the best idea to take out more debt in order to pay off other loans – this could be a viable option if you really believe that your money-issues are only short-term. A debt consolidation loan could help you by giving you one large loan to pay off all your smaller debts. This can work well if you can arrange a new loan with better interest rates and lower monthly repayment amounts which will help you clear other debts that are causing you more trouble to pay off. When you can shop around for different loans with more favourable payment plans and interest rates, this could be a good option.

This option will only really work for some people, and especially those who are only having short-term money issues.

2. Come to an agreement with your lenders

You might be able to come to an agreement regarding specific payment plans, extension periods, or a reduction in your total debt by discussing it with your lenders. Many of them will want to get some back rather than nothing if you file for bankruptcy. So give them a call and discuss your options, and make it clear that you are considering bankruptcy seriously. You can try sites like this for more information: www.debtconsolidationnearme.com/florida/index.php.

3. Get an administration order

An administration order ties up all your debts into one package to make the situation slightly easier to manage. Then you can make one single monthly payment to a court. These are normally for smaller debt amounts and are good for people who can afford to pay something back. After an initial period, the rest of the debt will be written off.

4. Get a debt relief order

The final of our alternatives to bankruptcy we will consider is the debt relief order. If you’ve got debt and don’t own a home, then you could be entitled to a debt relief order. These are normally granted to people who don’t have many assets and cannot repay their debts. When you get a debt relief order, lenders will not be able to take action to recover money owed for at least a year, unless they get specific court permission. This leaves you with a bit more room for movement without having to worry about having debt collectors taking any of your things away.

When you have one of these relief orders in place, you’ll still have to pay normal bills like your utilities. After this initial period, your debts will be written off. To qualify for one of these orders, you must not be able to pay any debts, but the debt needs to be a smaller amount. You also must not have many assets.

Is Debt Always A Bad Thing?

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Could debt actually improve your life? Image licensed under Creative Commons.

Is debt always a bad thing? Many of us automatically assume debt is a hugely negative state of affairs, and while it’s true that unmanageable debt is frightening, it may surprise you to learn that some debt is actually positive. Often treated as a dirty word, most of us can’t avoid having some form of debt, while some try to actively avoid it.

And yet not all debt is created equal. There are some positive forms that could help you reach your goals quickly. You just have to know how to use it. Here’s how the right kind of debt can get you ahead of the financial game…

Debt Can Help You Make Money

It may sound hard to believe, but the right kind of debt really can help you to make money. The key is not to go into debt for consumer items you couldn’t otherwise afford, like that designer bag or new iPhone. Instead, use debt as a powerful tool to help you reach your life goals. Invest in an asset – like a house or apartment or even for something like doing an MBA and you’ll be channelling money into something that will pay you back. If you’re clever about the property you buy – selecting an up and coming area, negotiating a good purchase price armed with data from sites like MousePrice– then the value will rise over time. When you’re ready to sell, you will have accumulated a profit, even with the mortgage balance to settle. If you go into debt knowing that you’ll get greater value out of it further down the line then it’s a positive investment.

It Can Be Cost Effective For Purchases

Interest rates are at historic lows right now, so if you want to do something like buying a car, it’s actually better to use credit to make the purchase than dipping into savings and investments. If you have money in tax free savings like ISAs or even stocks and bonds, it doesn’t make sense to cancel out the returns you get from them in order to make a purchase. Considering your overall financial picture, you’re better off using credit to pay – especially if you lose tax benefits by liquidating an asset.

You Can Fill In Cash Flow Gaps

For those who have a portfolio career, are self-employed or starting their own business or work in a job that is highly dependent on commission, life often involves a fluctuating income. When used responsibly, short-term loans can get you through time periods where cashflow is lean – provided you use the boom times to pay them off. This regular repayment schedule will also help to build a really good credit rating, as lenders can see a history of responsible borrowing. You will then be offered better rates, reducing the overall cost of borrowing. This creates a virtuous circle of good credit that benefits your financial situation.

Debt doesn’t have to be an intimidating or shameful prospect- if you learn to use it responsibly, it can really be a force for good in your life.

 

How To Be In Control Of Your Own Money

Being in control of your own money is very important if you want to make sure that you avoid any sort of unmanageable debt. You should always know where your money is going and how much you have to live on each month. In this article, we are going to help you with understanding how you can be in control of your own money. Make sure to keep reading if you’d like to find out more.

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Know What You Have

First of all, you need to make sure that you know exactly what you have each month to spend. This is very important as you won’t be able to be in control if you don’t know what you have to work with. Make sure to take a look at your bank statements and if you have a joint account, discuss with your partner how much you both spend each month. This can help you figure out what you need to control and how to control it.

Use Online Banking

One of the best ways to stay in control of your own money is to use online banking. Opening a bank account online is really easy and when you do, you’ll be able to view up to date information about the money that is in your account. If you have an online bank account, you should make sure to check it at different intervals throughout the month to ensure that you know how much you are spending. You would be surprised at how much the little amounts can add up to.

Make Cutbacks

When you start to see how much money you are spending every month, you will know what you are spending money on unnecessarily. This is a good way to figure out what you can make cutbacks on. Write a list of things that you spend too much money on and set yourself some goals to spend less money on that every month. For example, if you find that your daily coffee is amounting to a high figure, you should try and have one or two less a week. Once you make these cutbacks you will feel in control of your money and you will be happier with your bank account in the end.

Give Yourself An Allowance

Our final tip for those who want to be in control of their own money is to do something which a lot of parents do to teach kids the value of money – giving an allowance. You should allocate yourself a certain amount of money to spend each week and if you do this successfully, you will feel more in control of your money. A great way to do this is to take out cash each week and only spend that cash on your day-to-day purchases. Give yourself an allowance and feel more in control of your money.

Follow our tips if you want to stay in control of your money.