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If you are trying to save money as a parent or you find yourself hitting the wall so often, it is so important to understand that there are many options for you when you’ve hit that financial “low.” There are a number of solutions available, yet so many people don’t have an understanding of what they can do. Let’s show you some of those critical options that can make a big difference to you financially and psychologically.
Bankruptcy
Many people view bankruptcy as the poisoned chalice, something that shouldn’t be touched at all. But in the right circumstances, bankruptcy can be an invaluable solution. If you are wondering what does bankruptcy do to the debtor, it gives them a fresh financial start and it can also provide a sense of protection to the person in debt.
Bankruptcy is a worthwhile solution when you have not just been struggling with paying off bills, but also if you got yourself into the wrong financial mindset. Bankruptcy can provide a number of lessons. It allows you to draw a line in the sand so you are able to wipe out your debts, but this also means that it can negatively affect your credit rating. While filing for bankruptcy doesn’t leave a permanent mark on your credit reports, it can affect your credit score for 10 years if it is a Chapter 7 bankruptcy, or if it’s a Chapter 13 bankruptcy this will stay on your credit file for seven years. This is why you’ve got to consider the bigger picture. If you’ve already got a home and you’ve just found yourself struggling with debt for whatever reason, this might be the perfect opportunity to start again
The Debt Solution Methods
There are a number of ways to pay off debt. It’s no easy task, especially if you pay the minimum amount every single month. It’s important to get into the mindset where you can pay debt quicker and preferably with a larger amount. There are different methods here including debt consolidation. Debt consolidation is when you typically take out a debt consolidation loan, where you can move all of your debts to one provider and you have a single monthly repayment. This makes it easier to keep on top of your debt.
In addition, there’s the Debt Avalanche method. The Debt Avalanche method involves making minimum payments on every outstanding debt and using any of the remaining funds to pay off the bill that has the largest interest rate, meaning you will save more in interest payments. It also reduces the amount of time it takes to get out of debt. The other approach is the Debt Snowball method. The Debt Snowball method is where you pay the smaller debts first, getting them out of the way before you move on to the largest debt. This is a great way to instill discipline. When you settle the smaller debts faster, it can increase your motivation. However, it can be more expensive overall because you’re not paying the debt with the highest amount of interest.
Streamlining Your Life
One of the toughest things about being in any form of debt is that it’s a constant blot on your life. Instead, you need to start thinking about how you can use this time as a way to increase your levels of motivation. When you’ve hit a financial low, everything can be a reminder that you haven’t done everything you can. But this is where it’s time to start confronting these issues head-on.
The biggest problem most of us have is the temptation to keep up with the Joneses. People are now experiencing major problems in their lives because they’ve hit a point where debt has knocked them for six. They’re not able to maintain the lifestyle they once had and therefore feel like they are a failure. Lots of people love to splash the cash and live beyond their means, but this is where having to streamline their life becomes really tough to do. But you can streamline your life by looking at those big expenses and opting for more budget-friendly options. For example, swapping your car for a cheaper one is something many people have to do.
You can also find ways to live a better life without focusing on possessions. While there are plenty of people that like to have lots of stuff, the reality is that it is unsustainable for so many, which is why debt is so commonplace. Learning to live within your means is a major psychological task. But this is where learning from previous generations who had a lot less can serve as some inspiration. The toughest thing is that now we’ve got instant access to everything, so it serves as a constant reminder that we’re not where we should be. But if you look at the big hitters in life, they practice forms of self-preservation, and many don’t even watch the news! And this is a very useful piece of advice because if we feel constantly under a sense of pressure watching things that catastrophize events, especially when it comes to the financial problems of the world, does not help you in the slightest.
When you’ve hit a financial low, you may think that there is nowhere to turn. There are options like debt consolidation or bankruptcy, but there’s also mental health support. There is a reason so many people feel overwhelmed by debt, and it’s because they did not learn the lessons initially. What’s important is that we all learn from our mistakes eventually. When we have the courage to say that we need help or we finally call up the credit card company and offer a payment plan, this is a far more effective starting point to ensure that you are now not just taking control over your finances, but taking control over your life. We can all feel like we’ve hit a new low, especially in the current climate, but there are many options available, it’s time that we all use them.
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