Each of us wants to have a prosperous and peaceful life. However, life always has unexpected variables and sometimes falls into debt and poverty. At times like these people are often afraid and don't know What to do when insolvent?? How do you get out of debt piled up? To have a clearer view and know how to deal with debt, please study the information below.
Reasons You Can't Get Out of Debt
Debt is something that no one wants to get involved with, but sometimes still get caught up in it even if it doesn't volunteer, some of the main reasons leading to debt are:
Unable to make a spending plan
In order not to create debts, you should set up a reasonable spending plan that is suitable for your income source. This is a seemingly simple task, but few people do it.
Think carefully about what you need to spend money on. Planning so you can capture the amount of money each month and limit spending money everywhere on things that are not really necessary.
Relying too much on credit cards
As the demand for loans increased, credit cards also became popular. With the benefits of credit cards, people often depend on it, leading to over-swiping and causing debts without even knowing it. Over time, the accumulated debt becomes larger and more difficult to pay, creating pressure on daily life and spiritual life.
Have a need to race for branded goods
Some people have a need to buy things beyond their income ability. Often it will be due to the need to collect items or compete with friends.
When you see an expensive item, you will have the thought of collecting all your money and everything to buy it to satisfy yourself or to honor your friends. After that, there are not small debts that appear one after another, if this event lasts for a long time, it can easily lead to bankruptcy.
Trusting people excessively about money
Trusting others and taking out a mortgage to borrow is also the fastest cause of debt. No one can predict what will happen, so when you guarantee someone else's loan, you have to be really careful, it's best not to do that, even close friends or family members.
Low paying job
When working with a moderate salary just enough to live through the day and without additional sources of income, it is easy to fall into debt when there is a problem. Do more jobs you like to earn extra income and pay for bad cases.
Use money to express yourself
People often feel guilty and self-deprecating when they see their friends better than themselves. Sometimes it's just for the sake of being honorable to everyone that they spend too much money. Do not think about the next days of borrowing everywhere to be able to maintain life, debt piled up and unable to pay.
Investing in the wrong place
This is the fastest form of debt creation, when you want to start a business or invest in a certain job that requires a very large amount of money, if you do not learn carefully or the working process makes mistakes, it leads to bankruptcy, causing damage. small, a huge debt appeared.
Currently, with increasing financial needs, forms of fraud appear quite common. Be very careful when borrowing money or making payments over the phone. Should go to a reputable bank to complete the procedures to avoid losing money unjustly.
Learn more: Make money online through MoneyGuru what?
What to do when default leads to debt piled up?
When in debt, people often have a mental breakdown and make unwise decisions that affect others and make things worse. Take a look at the solutions below to make the right decisions.
When faced with difficulties, it is very important to stay calm. Only a stable mind can find the most intelligent solution. Panicking and making decisions at this time can easily make things confusing and deadlocked.
First, calmly arrange everything and handle each of them as follows:
- Look for the cause of the default.
- Reconfirm the debt lender about the amount and interest.
- Check your existing account, all things can be sold for money.
Discuss with the debtor to extend the date
If possible, negotiate with the debtor to ask for an extension of the day, should have a clear repayment plan to gain the trust of the debtor. Clearly state your difficulties, do not hide, but express your goodwill that you will pay off the debt exactly as the extended plan.
Check your property
Considering the actual situation of income sources and total assets held, what can be sold to repay debt should be used. The most necessary thing right now is to earn money to pay the principal and interest, do not hesitate because the interest may increase day by day.
Ask your loved ones for help
In these times look to see who among friends and relatives you can rely on. Open your mouth to ask for help. State your situation and show them your sincerity and seriousness to revive, fortunately you can borrow some money from those people.
If you are depressed, then look to your family, family members are always the best spiritual medicine and maybe they will give you a small amount of support.
10+ effective ways to get out of debt you should not ignore
If anyone is in a state of heavy debt and wants to get out of it, here are some suggestions:
Prioritize debt repayment
This is the most important note, if you want to get out of debt, debt repayment should be a priority, put aside unnecessary expenses.
There should be a clear plan for debt repayment, should consider which party to repay first and how long it will take to pay off that debt.
Make a list of debts
Sort your debts in the most detail by interest rate and term. Consider and pay off high-interest loans first, so you can reduce the amount of interest next time.
Then it comes down to paying off the lower-interest debt. Although the amount of interest is still quite high, it has reduced the burden on some loans.
The wisest thing now is to stop the loans, don't borrow more money anywhere. If you continue to borrow, the amount of debt will increase while you cannot afford to pay. This often has some unfortunate consequences. Quickly find a way to pay off old debt as quickly as possible.
Try to save money
The most important thing to do now is to tighten spending, only buying things that are really necessary and limiting indiscriminate shopping. If you still keep the habit of racing and shopping regularly, it will be difficult for you to get out of debt. With the money spent to buy luxury items, you can accumulate and pay off a large debt.
Solve high-interest debt
Pay attention to focus on solving high-interest loans first, this is considered smart debt repayment. If you pay off debt that way, you will significantly reduce your debt and interest next time. Paying off high-interest debts has relieved a part of the pressure and burden.
Find ways to reduce interest rates on loans
Once in debt piled up, many people become frantic and do not know what to do when default? How do you get out of debt piled up?
Everyone please stay calm, the important thing right now is to find out how to reduce interest on debt. Research on the lenders that have the lowest preferential interest rates, have cashback programs when using or promotions, etc. to be able to reduce the interest rates of lenders in the most optimal way.
Constantly increasing income
This is the most practical method of paying off debt. If you want to get rid of your debt burden quickly, look for a part-time job. You can do the work you love or the job with a salary that is suitable for your ability, if you try so, you will quickly pay off all your debts in a short time.
Break the habit of expensive spending
Expensive spending is the fastest route to default. With a large amount of money being spent and not getting any profit, it will very quickly put you on the road to money deadlock.
Buy only the things you really need and quit the habit of demanding expensive things. This way you can save a large amount of money to pay off debt.
Be patient, don't give up
With large debts, it is not possible to pay them all at once, so try to work on paying them off slowly. Follow the pre-established repayment plan to complete it on time. If you are patient like that, the debt will gradually decrease and one day not far the debt will disappear.
When you have a plan to repay the debt, you must strictly follow it. However, to avoid creating more pressure on yourself, when you finish paying off a certain debt, reward yourself, encourage yourself to have more motivation to try and pay off other debts.
Some financial knowledge to know to get out of debt
If you are in debt, it is important to understand some information during the repayment process to make the process go more smoothly:
Total actual outstanding balance
Usually people only remember the amount of interest paid each month but forget the actual total outstanding balance. And bewildered to see this balance is larger than what is known.
That is why borrowers should pay attention to the amount of payment each month and the total amount to capture all loans. From there, you can create a repayment plan that is right for you.
Interest rates on debts
Debt always comes with interest, because these interest rates lead to cases of debt piled up. Write down the interest rate on each loan and prioritize paying the highest interest rates first. This is not required, but it is the best option to reduce the burden of debt repayment next time.
Amount to be paid each month
You should determine your income and consider how much you can afford to repay each month. Give a specific number so it's easy to see how long the debt will take to complete.
My monthly income
List all the jobs that you are doing to earn extra income. From that information, it is possible to divide expenses and repay debts reasonably.
Remaining amount for repayment plan
After listing all the jobs and knowing the amount of money earned within a month, divide the amount into several purposes such as: food, house, gas, wedding... and the amount The rest is used to pay off debt.
Find out about the unit that supports the maturity of bank loans
In case you cannot afford to repay the loan, find out a reputable bank loan maturity support unit to promptly handle the problems that occur and create conditions for you to have more time to prepare money to pay the bills. pay.
The article provides some information to help you know What to do when insolvent? How to get rid of debt piled up? and offer some reasonable solutions. Hopefully, after reading this, you have a more comprehensive and open view when accidentally getting into debt.
The article was edited by: Lamchutaichinh.vn