Unavoidable events, unforeseen events in life, or excessive spending can lead to being in debt over your head. Having debt problems is difficult to manage financially, but also emotionally for the victims. Fortunately, debt solutions exist.
Find the cause of the debts
Keeping in mind the reason for your debt is a first step in avoiding making the same mistakes or making the situation worse. If your debt does not have a well-defined cause such as a medical or family emergency, try to analyze what behaviors lead you to this situation.
Have you spent too much on hobbies, going out, or buying things that are unnecessary or without added value? Knowing where your debt is coming from and why you haven't been able to control your spending is a first step in getting out of debt.
Get real with your budget
Budgeting is the key to healthy financial behavior. No need to go into complicated calculations or divide your expenses into countless categories. Add up all your monthly income, and deduct your expenses. Among your expenses, distinguish the inevitable expenses (rent, water, electricity, gasoline for the car) from the avoidable expenses (restaurant, take-out coffee, fashion clothes, etc.).
If your expenses exceed your income, it may be time to reassess your budget. Which of the avoidable expenses can you completely eliminate? Which of the unavoidable expenses can be minimized? For example, is it possible to move into a more modest apartment or save money on heating or air conditioning? It is important to be realistic; too strict a budget will be difficult to keep and can be discouraging. Sometimes, to get out of debt, it's better to take your time and adopt sustainable behaviors rather than trying to resolve the situation too quickly.
Many applications allow you to track your expenses against a pre-established budget. Absolutely avoid shopping on credit and keep your credit cards out of your wallet to avoid spreads.
Settle debts systemically
To get out of debt, the only solution is to settle your debts one by one. It is best to pay off debts with a high interest rate first because they are the most expensive, even if they are not the highest in amount.
It's best to focus on one debt at a time, while still making minimum payments on other debts to avoid making matters worse.
Consolidate your debts
Having a lot of credit card debt on so many accounts can be stressful. Debt consolidation solutions exist. These solutions allow you to bring together all your debts into one, in order to facilitate the management of interest and payments. A consolidation plan usually comes with a lower interest rate and it helps centralize payments and minimize the stress associated with too much debt and reminders from all sides.
Increase your income
While the expenditure versus income equation just does not seem to work, it is also possible, under certain conditions, to find additional sources of income. For example, selling some unnecessary items, finding a second job, etc. These decisions should be made with your health and abilities in mind.
Call on a financial coach
The most important thing to get out of the debt spiral is to talk about it. Openly to those close to them, at first, but also with a trusted financial advisor who can offer solutions and options adapted to your situation to help you get out of debt.
Dealing with debt is never easy. To avoid making the situation worse, take a rational approach to managing your debts and surround yourself with people who can provide you with moral and financial support to get out of the financial difficulties you are having.
