Taking out a loan is easy these days. You can take out a loan in ten minutes, and there are options where you only need a passport. With the money you can buy anything you want: a car, household appliances, an apartment.
But what if the situation gets out of hand at some point and you’re about to go bankrupt? How do I get out of the credit pit? We will give some practical advice on this.
Credit card holders often make a fixed mistake. Banks often offer the option of only using a credit line against payment of interest. This is the minimum payment. It seems that such a scheme is very practical. You can agree, but it’s only for the bank, not for you.
If you make minimal payments every month, the question of how to get rid of the debt is always relevant to you. Experts estimate that a person who, for example, took 300,000 dollars from a bank at 18 percent a year and made a minimum payment every month, has to pay the debt for 26 years, which means that the amount is almost twice the original gives.
Would you like to stop thinking about how to get out of a credit crunch in the future? Then immediately try to allocate as much money as possible to repay the loan. When the minimum payment is five thousand dollars,
Small and big debts
If the mistake has already been made and you still have a credit hole swallowed up, do not make any new mistakes. Many borrowers who find themselves in a difficult situation therefore first decide to pay off small debts and then think about large ones.
The logic is clear: firstly, it is difficult for a person to keep information on all loans in mind, especially if there are many of them, and he wants to get along with some, and secondly, for many it is psychologically easier to get a large loan than with many small ones. Such an argument is fundamentally wrong! In order not to forget an obligation, you can transfer information to a computer.
Now there are many special programs for accounting for finance. When you get an electronic ledger, it is easier to manage not only your debts, but also your money in principle. Remember, it is more profitable to repay large loans first, which are borrowed at the highest interest rates and imply the largest overpayments. However, if the interest rates are the same for all loans, it is indeed more appropriate to deal with small debts first – this is a good motivation for continuing to pay large loans.
Many leave the predicament, see when increasing the credit limit. Let’s say right away: this is not an option at all! So you only delay the time, give yourself a break, but do not change the situation for the better, but only make it worse. The increase in the limit leads to an extension of the loan period and the mandatory monthly payment.
Some borrowers looking for options on how to get out of the credit hole, go to the bank and request to pool a number of debts into one large loan to extend their repayment term and reduce the amount of monthly payment. Basically, the approach makes sense. But there is a problem.
Such a program has been tested in Western European countries. We are only able to refinance loans, ie to receive a new loan to repay old loans, without any possible preferences and discounts. The main thing, however, is that the refinancing process involves paying various fees and commissions, making the effort ultimately useless and only increasing debt.
Such a decision can only be made in relation to long-term loans, eg B. mortgages, and only if you have taken out loans at very high interest rates.
Now go straight to the story of how to get rid of debt. First and foremost, believers gain credibility. You cannot bypass the payment in any way. Therefore, there is no need to hide from the banks and people you owe.
Tell us sincerely about your difficulties, let me know that you will not avoid commitments. Maybe you will meet and find a way out of a difficult situation.
Order in finance
Therefore, if you are the owner of numerous debts, you do not know how to keep an eye on personal money, and you have created a complete mess in financial matters. Start controlling expenses and income. Track all of your expenses every day to know exactly where the money is going.
Try to keep such bookkeeping for at least a month, and then analyze your financial situation. Pay close attention to the costs, maybe each of them can be avoided and thus saved. Then make a budget for the coming month. Provide all possible income and planned expenses (let the first month’s accounting data guide you). No matter how difficult it is, stick to your budget and don’t waste more than planned. So you can clean up the finances and maybe find a way to get out of the credit gap.
Pay debts when you live from salary to salary course difficult. Then where can you find additional funds? It may make sense to take on more responsibility at the main workplace for an additional fee. If this is not possible, it is advisable to look for a third party position. If you have organized your working hours correctly, you can surely increase your income.
The idea of new loans to debtors causes a shiver and confusion How do you get out of the credit pit if you borrow more and more? In fact, this option can be a very wise decision. Borrow only from people who are not very interested in you. Do not hesitate to contact your relatives and friends with the words: “Help me get out of the credit pit!” People who are close to your heart will definitely help.
Also, you don’t have to return the money within a set period of time, so you don’t have an accurate debt repayment framework. But of course it is also not worth undermining the relatives’ trust. Return the borrowed money at the first opportunity.
The hero of the famous Soviet cartoon, Uncle Fedor said: “To sell something unnecessary, you first have to buy something unnecessary …”. You cannot agree with this statement. But you can sell and at first glance that seems necessary. For example TV, especially if you have it plasma and expensive.
Not only can you make extra money, you can also free up the time you’ve spent watching television and filming for something more useful, such as how to get out of the debt trap. Perhaps it makes sense to leave the car at the time of the crisis. You will not spend money on maintenance, repairs, fuel, etc. and you will be able to save the money saved on loan repayment.
Now that you know how to get out of there, start taking action! And if the financial nightmare is left behind, forget about the loans forever! It is better to save first and then buy. However, if you are in dire need of money and decide to borrow again, keep the ceiling in mind: loans should not make up more than fifteen percent of your annual income.
Before taking out a loan, check it carefullyAll conditions of the bank, the amount of possible fees, payment terms and so on. Calculate how much the loan actually costs, whether you can repay it, and whether your family budget bears such a burden. Be financially savvy! Good luck!