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Managing debts can feel like juggling sharp knives. One wrong move and you could be in big trouble! This is especially true when your income drops either due to a pay cut or a job loss. You might be afraid to answer the phone or open the mail because you know that the bills are mounting. Whether you’re reading this at the start of what you’re expecting to be a difficult financial period or you’re already in over your head, here’s some practical advice for you:
Stop Using Credit Cards
Moving to a cash budget is vital when you experience loss of income. While you might be tempted to put everything on credit to preserve your cash, this is a mistake! Cash only budgets help you keep spending in check. It might even be prudent to cancel your credit cards or take a consolidation loan at a lower interest rate than what you’re paying today. If you’re already in trouble, stop using your cards immediately. Compound interest is a dangerous thing when you income drops.
Make payments On Time
Not only will making payments on time reduce your interest charges but eliminate costly late charges as well. If you’re having a problem making payments on time, consider speaking to your creditors to make a payment arrangement. Being open and honest about your situation can help you more than you might expect as creditors would rather help you come to an arrangement than be ignored.
Trim Expenses
It can be painful to face the truth and start making hard decisions about your finances but various things can help you lower your monthly bills. Perhaps you can downgrade your mobile phone service and get rid of expenses like newspaper deliveries or downgrade your cable television as well as eliminate trips to the salon, and other expenses. Adding all these small expenses together can make a big difference to your monthly expenses. It goes without saying that you’ll want to stop spending on take-aways and shop for bargains when you do grocery shopping. It might feel depressing to you that you don’t have any extra money to spend but trimming expenses a little can amount to your being able to pay bills, loans, and the rent on time.
Get Debt Counselling
You may have choices such as an informal arrangement or a voluntary arrangement (known as an IVA). This can take a weight off your shoulders and help you deal with your debts in a manageable way. This will stop the creditor calls and letters and put you on the road to recovery. The sooner you do this, the sooner you’re be managing debts and reducing your debt load. Debt counselling services can take a weight off your shoulders, especially if you’re at the point where you’re already in trouble. Don’t leave it too long otherwise you might not be able to get creditors to agree.
Whatever you do, act on your financial situation as soon as possible so that you can make debt management easier for yourself!
