Category Archives: Debt

How to Avoid Filing for Bankruptcy

Bankruptcy is difficult and stressful. The after effects can leave you with a low credit rating, meaning it will take years to recover and start making use of credit lines and mortgages again. Before you proceed with bankruptcy, try these tactics to get your financial life in order.

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Settle or Negotiate Debts

Talk to creditors and see if they are willing to settle your debts for a fraction of the cost. This works like debt consolidation, but saves you money. If possible, get a debt consolidation loan to combine all your debts into a single manageable payment, so you can handle it budget wise.

Sell Your Assets

Your assets and valuables could be at risk in a bankruptcy claim anyway, so consider selling some things to help dig your way out of debt. Do you have a second vehicle you can part with? Do you have other valuables? Meet with an appraiser for high value items. Sell other items online or at a local flea market.

Borrow Money from Family

Though it means swallowing your pride to do it, if it will save you from filing bankruptcy, don’t be afraid to ask for help when you need it. If it means keeping your home, it is worth risking the strain on the relationship.

Sacrifice

Sit down and look at your budget. See what you’re actually spending compared to what the budget says you are. Make cuts where you can, even if it means you have to make more meals at home, or get a friend to cut your hair for you. Shop secondhand stores for clothes and shoes. Rent movies instead of seeing them in the theater. These sacrifices are short term and the savings can go a long way toward repaying your debt.

 

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How to Avoid Running Into Credit Card Debt

Credit cards are a way to run into debt. This is because it is very easy to incur debt when there seems to be no limit for spending. To make sure that you do not go into debt, you need to take care of your credit card bills. Here are some ways to avoid a credit card debt.

CREATE AN EMERGENCY FUND

You need to create an emergency fund to avoid spending money through a credit card. Generally people only spend money from a credit card for unforeseen contingencies. Having an emergency fund prevents you from overspending using a credit card.

PAY YOUR CREDIT CARD BALANCE ON TIME

Make sure you pay your balance in time rather than carrying it over to another month. You can ensure that you do not have a big credit card debt at the end of the months that follow. Carrying over the debt and spending money you cannot afford is not a smart plan if you want to save money.

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AVOID MAKING BALANCE TRANSFERS

You should not transfer your balance to another card unless there is a rate of interest which is lower than the credit card. Too many balance transfers can result in a heavy debt.

AVOID USING CASH ADVANCES

Cash advances can be avoided rather than used. Instead, have budget so that unanticipated expenditure can be met through this. This prevents the cash advances from being used as a way to tackle expenses.

MAKE SURE YOU COMPREHEND CREDIT CARD TERMS

Understanding the rate of interest which is charged and the processing fee are very important prerequisites to avoid overspending using your credit card. Therefore, make sure you understand the terms and conditions of your credit card fully.