When you are over your head in debt the situation can be very stressful. No matter how much effort you put into paying your debt off it seems like you are getting nowhere. Perhaps you are paying the minimums on your credit cards and just treading water. You can stop spending on your cards which is a good thing but sometimes that just isn’t enough. However, there is good news. By practicing a few healthy financial habits you can learn how to deal with debt and bring your credit situation under control.
How To Deal With Debt – Step One: Do a Financial Analysis
The first step to getting your financial life back in order is to do a quick analysis of the situation. How much debt do you have and how did you get into debt? These are important questions to ask yourself. People may find themselves over their head in debt for many reasons. Perhaps you have medical debt, are past due on taxes, or simply have used your credit cards unwisely. Whatever the reason, you need to find the exact amount of debt you have before we can begin the process of how to deal with your debt.
Once you have your total debt number, the next step is to write down all of your income and expenses for the month. We need to assess whether you have enough money to cover your current expenses.
Dealing With Debt – Step Two: Contact Your Creditors
If you are dealing with overwhelming debt you need to contact your creditors and renegotiate the terms. The credit card companies and banks want to get paid and they will be willing to work with you. Call them and let them know you are going through financial hardship. Many of them will temporarily suspend your accounts so you don’t rack up more debt and you can negotiate a lower interest rate to help get you back on track. Don’t look at the temporary suspension as a bad thing. Instead, work towards paying off your debt and your reward will be a free and clear card with normal spending habits.
How To Deal With Debt – Step Three: List Which Debts Should Be Given Priority
Although we eventually want to pay off all of our debt, some bills are going to be given priority over others. There are a few ways to approach this. You could start by paying off the highest interest debts first. This is a good strategy because they are eating up most of your payment. However, this isn’t the way I recommend doing it.
I prefer to pay off the debt with the lowest balance first. I do this for two reasons. First of all, it will give you a sense of accomplishment when one of your bills goes away. Also, once you have that bill taken care of, you can now use the money that you were spending on that bill each month and apply it to the debt with the next lowest total. This is called the debt snowball and it is very effective.
Let’s say you have a credit card that you owed $350 on and each month you were paying $50 towards it. Once the bill is paid in full you can use the $50 that is freed up each month and apply it to another bill. This will start to pile up and you will be paying your debt off faster and faster.
- Contacting the creditors with the intention of redesigning the debt situation, so that it becomes more manageable will also be an option to consider. Most debtors are willing to help as it would eventually mean that they too will be able to benefit from the debt being eventually paid in full. Simply continuing with the current payment conditions will not help and may even cause more problems when the initial sum is not cleared and payments are only servicing interests incurred.
- Although this may incur some cost, seeking the help of a professional financial planner should also be explored as an option to finding ways to manage the mountain of debts. These professionals will be able to provide a better insight on how to handle matters to the best interest of the individual.
Some of the highest interest rates you can find are from pay day loans. If you are taking out these type of loans you need to get on top of them as soon as possible. See our article on how to deal with payday loan debt.
GETTING HELP FROM PROFESSIONAL FINANCIAL EXPERTS
Sometimes learning how to deal with debt can be more than you can handle. If you feel that you cannot cure the situation on your own I suggest calling a professional debt management company. These professionals will take a look at your current financial situation and give you the best option to recover. They handle these situations every day and the right company will always put you first.
At Sunbeam Financial we have partnered with CuraDebt because of their excellent track record and customer service. There are many debt management companies out there and in our opinion CuraDebt shines above the rest. They have been in business since 2000 and have more than 900+ reviews with a 5 star rating. They are accredited with the Better Business Bureau and have an A+ rating there as well. With personal and business debt settlement, debt negotiation, consolidation and IRS tax relief, they have a program that will work for you.
Click here to visit the CuraDebt site and get your free financial analysis: https://sunbeamfinancial.net/CuraDebt
A CuraDebt financial analysis is quick and easy. They will walk you through the process step by step and give you the best options for your current situation. Try it out today, it is FREE and you have nothing to lose.
Professional Help With Managing Your Debts
Getting the help of a financial planner is smart, they can help you stay on track on not over commit financially. A few bad financial decisions can lead you down a slippery slope that is hard to recover from. A good financial planner will give you the information you need to make informed choices in your financial life. Once your finances are in order a financial planner can help you choose suitable investments so your money can grow on autopilot. These professionals will give you options so you can choose the investment with the proper risk to reward for you.
However, getting the help of an expert is not free and some people are not willing to pay the small fee for their services. They prefer to do it themselves instead.
How To Deal With Debt – DIY WITH PERSONAL FINANCIAL SOFTWARE |
For those who have a bit of tech skills, there are many options online. There are several free software programs on the internet that will help you plan your finances on your own so you can learn how to deal with debt. This is a great option for individuals who don’t want to pay the small fee for a financial expert. Not all financial software is created equal so you will have to do your due diligence and find the best and highest rated.
Most of the programs are very user friendly and easy to use. Simply input the information requested and the program will provide you will several different options. This is an advantage over using a financial planner because you can quickly and easily see different scenarios and how changing one or two investments will make a difference in the long run. A financial planner will give you one or two options but a software program can quickly give you dozens of options.
A good financial software program should be able to provide you with retirement options, budget and cash flow options, college planning, net worth projections, and asset allocation projections. This can really come in handy and give you a solid game plan for the future. However, before you start planning for the future you need to make sure your financial status is healthy. You need to learn how to deal with debt first and plan for your retirement once you are out of debt. Sunbeam Financial is here to help you out. Give Curadebt a call and let’s get your out of debt!
