There are people that fall into debt despite the fact that they had foreseen this crisis knocking at their door and there are yet others that are taken by surprise due to the unexpected financial crunch they have to face due to financial mishaps or miscalculation.
Whatever is the case, in both the cases, you have to deal with cash, most importantly cash that does not belong to you but someone else’s money since you have borrowed that money to fulfill your own financial obligations. As such, you tend to fall into a vicious cycle of debt- a trap that you find it difficult to wriggle out of.
In this article we will discuss how you can get out of debt without having to seek professional assistance to do so.
However, there is an important aspect that you need to keep in mind. And that is you can opt for the DIY way to get out of debt as long as your debts are manageable and you are not on the brink of bankruptcy. So, before you see yourself reaching that stage, refrain from falling into the ditch any further.
Steps to get out of debt – Do it Yourself
You can go through the following steps to come out of the debt trap on your own. Check out these points-
- Assess your debts
As of 2016, Americans already had USD$946.9 billion in outstanding debt on credit cards, which is also referred to as ‘revolving debt’. As an individual, it is important to understand where you stand.
You will have to address the debts depending on the current scenario. Make a note of the type of debts you have, the rate of interest that each debt attracts, duration (repayment period) of the loans that you have availed, and how much you have already paid off. In order to make an assessment, you need to support it with relevant documents.
- Calculate your cash flow every month
Prior to chalking out a plan as to how you intend to make the repayment, work out a budget. Calculate the amount you earn each month, regardless of whether it is from your paycheck or rental property.
Take each and every incoming cash flow into account. Also, take into account the amount you have to spend, your financial commitment or obligations. These will also include the taxes. Find out the difference between the cash inflow and expenses you incur every month.
- Work out a plan
Now that you have a clear picture of your financial status, it becomes easier for you to make a repayment plan. Find out if any of the lenders have provision for quick loans. If so, what is the mode of repayment and how can you go about the same. Start repayment from the next month without further delay. If required, you can also talk to the lenders and discuss how you intend to get out of debt.
- Negotiating with lenders
This is one of the most important aspects of debt repayment, negotiating with lenders. Also, request them whether or not the terms and conditions that your loans attract can be reconsidered or made negotiable so that the outstanding loan amount is reduced, which ensures faster debt relief. If you have to talk to a particular more than twice or thrice, do so. It might pay off in the long run.
- Reduction plan implementation
It is time to implement your debt reduction plan religiously. Avoid falling behind on payments again especially after you have embarked upon the new route. More than a failure to deliver what you have promised to the creditors, falling behind on payments will adversely impact your morale and you will lose motivation. So, try not to stop payments midway.