Being in debt is a nightmare that you never want to experience, but people often do. In fact, experts believe eighty percent of people in America are in debt. That doesn’t make the odds favourable, and the situation gets worse from there on out. Once you’re in debt, only half escape it before they reach bankruptcy.
That’s why we’ve been speaking to economists and analysts to find out what the best ways are to avoid and escape debt. Let’s start with the obvious then.
Avoid Using Credit Cards
Analysts claim that this is more of a psychological problem rather than anything else. Most people who are using a credit card see it as spending money they have.
Although they know the truth, subconsciously they see the amount they can spend on the card as the amount of money they have. When in fact of course, when you spend on a credit card, you are borrowing money.
It’s money that you will have to pay back, and it isn’t interest-free. That’s a problem because by piling up bills on your credit card, you’ll develop a bad credit rating.
It will stop you paying off your debt by borrowing more money. Borrowing more money can be helpful in certain situations as you’re about to discover.
Consolidate Your Debts
If you have borrowed a lot of money from different areas and you’re in debt, it might be best to consolidate it. Experts claim that consolidating your debt is one of the easiest ways to reduce it and make paying it back easier and more manageable.
It’s one of the ways that people who were in debt get their finances back on track. You can also work with a lender to find the repayment plan that suits you based on your personal finances.
Borrowing Money Can Be Beneficial
If you’re in debt borrowing money can seem like the last thing you should be doing. But actually it can be helpful in one specific circumstance. If you’ve borrowed cash that has a huge interest rate, you can tackle it by borrowing from another company with a lower interest rate.
You pay off the first loan and keep the second that is growing at a slower pace. You don’t get rid of your debt completely, but you do reduce its growth.
Unfortunately, a bad credit rating can stop you from being eligible for this option. But, Ferratum offers payday loans to people with bad credit so you can still get rid of a high rate of interest.
Using Your Assets
Finally, the biggest mistake people make is that they underestimate how serious their debt problem is. They do nothing until it is too late when if they had sold the assets they owned they could have escaped their debt.
They might have had to downsize by selling their home, but they would have survived and rebounded. Eventually, their finances would have stabilized. Unfortunately this opportunity was lost.
So, if you find yourself in debt, don’t do nothing. Act as soon as you can and take the appropriate measures to manage the situation before it grows out of control.