Things have been financially hard on you in the past few months. You are swimming in debt left, right, and center, and you can’t possibly see a way out. You’ve even contemplated filing for bankruptcy as a way of cushioning yourself from creditors.
Before you consider this drastic step, try and explore other options. Getting out of individual or business debt is hard, but not impossible. With a plan at hand, and by taking the right steps, you can give yourself another chance to rebuild your financial standing. Here’s how.
Accept That You’re In Debt
The first step towards recovery is always to acknowledge the situation you are in and try to find a solution. Your debt situation could result from someone’s misdoing, but what’s done is already done. Don’t take any more time wallowing in misery, trying to resist the fact that you’re in debt.
Wallowing in a pity party will only waste your energy and cloud your judgment. Instead, use that time to carve a path out of the situation.
Take Inventory of Your Stock
It’s important to establish your financial standing to give you an idea of how to start the recovery process. Make a record of all the resources you have and the liabilities you face. This will form the starting point to plot the path to your recovery. Consider
- What assets you still have in your possession
- How much money you owe
- How much income you receive per month
- How much you spend
- Your credit score
- Long-term implications of the debt situation
All these factors will help you know your limits as well as strengths and weaknesses. They all affect your recovery plan.
Create a Recovery Goal
Now that you know where you stand financially, the next essential thing is to determine where you want to go. The main objective here is to get out of debt, and you should come up with a plan that helps you achieve that.
Your goal should be specific, measurable, attainable, realistic, and timely. Wanting to make enough money to pay off your debt is a broad and vague goal. It also lacks a sense of commitment to clearing the debts you owe.
Your debts are not all equal, and they don’t carry the same weight in terms of the interest rate. Critically think of the ones to clear fist, given the assets you have left and the money you make monthly. Commitment to getting out of debt requires that you make small but sure steps towards the overall goal.
Many debt experts recommend starting with loans with high interest rates. This way, you’ll save a lot of interest on repayment. You can use the money you save to pay off other debts.
Start your journey to recovery as soon as you have a plan in place. Talk to your creditors to reschedule payments based on the installments you can afford. Don’t despise small payment amounts; they’ll eventually add up to much over time. As long as you’re not stagnant, be glad that you’re taking small steps in the right direction.
Getting out of debt doesn’t have to be intimidating or a far-fetched idea. Even if you’ve lost the financial power you previously had before the pandemic, you can still work something out. With a plan in mind and a strong will, you can get out of debt instead of filing for insolvency.