It seems as if living in debt in contemporary America is almost as ubiquitous as diabetes. Maybe there is something wrong with us but if we really want to make the country great again, then we need to start by looking at our personal finances.
How to go into debt? Let’s count the ways. There are student loans, credit cards, payday loans, and medical expenses to name a few. Ok, that part was easy, but what about how to get out of debt? That is a bit trickier; however, this article will give you some ideas on what to do when you are deep in debt.
- File for Bankruptcy
One of the great things about the law in the U.S. is that allows almost anyone to file for bankruptcy protection. Fortunately, statistics show that bankruptcy filings are continuing to decline, with fewer than 800,000 people filing in federal courts last year. Even better is the fact that the stigma which was once tied to bankruptcy no longer applies. This means that you aren’t punished for life for falling down. Instead, you can start over while ridding yourself of the burden of crushing debt.
According to Gagnon, Peacock & Vereeke Attorneys at Law, “Whether your debt is the result of unexpected medical expenses, the loss of a job, out-of-control credit, or a series of no- or low-profit quarters, many people are forced to consider bankruptcy as a means to regain control of their finances.” It’s important to note that the key words here are “regain control”. Bankruptcies are meant to give people a second chance financially, so if you find that this is the last resort, it’s imperative that you speak to an experienced attorney to determine what your options are.
- Cancel Your Credit Cards
While this might come across are extreme, let’s face facts – you are deep in debt. As such, this is the time for extreme action. Cancelling your credit cards is a great way to help you resist the temptation of going even deeper into debt.
An added bonus is that this will help to clean up your credit report as you will have fewer maxed out credit lines. The next bonus is that having fewer credit cards will ensure that you are more responsible when it comes to managing your accounts.
- Don’t Splurge
Yes, I know there is a sale this weekend and you really must get that new gadget. But stop for a second and ask yourself if your life will end if you don’t make that purchase? In most cases the answer is a resounding no.
As such, you need to find the inner strength to stop splurging. Avoid buying the expensive snacks, gadgets, clothes, or going out to eat every night. Instead, look at way to enjoy your life without going broke – after all, this is what our grandparents and great-grandparents did during the Great Depression and it seems like they turned out ok.
- Make a Budget
Failure to plan is a plan for failure and the same is true when it comes to getting out of debt. As such, you need to have a budget in place. Not only will this track your expenses, it should track when you get paid and how much you will get paid.
Having this plan in place is the first step in getting control of your finances, instead of the other way around. Another thing that comes out of having a budget in place is that it will help you to set goals – this might start with how to cut back to your expenses and then end up with ways to start saving money.
- Set up an Emergency Fund
If you are deep in debt and someone tells you that you need to start saving 20% of your income, tell them to get real. While this is a laudable goal, the realities of living debt in debt mean that you are often struggling just to make ends meet.
However, this doesn’t mean there is nothing you can do. As outlined above there are several concrete steps you can take to reduce your expenses. Then and only then, can you start to set aside part of your income for an emergency.
Start with $50, then move to $100, and then keep moving up from there. Before you know it, you will have $1,000 or more in savings, which means you can start thinking about investing instead of just making it to next week.
There you have it, five ideas on what to do when you are deep in debt. Take this actions to heart and before you know it you will be able to breath a bit easier.