Increasing numbers of Westerners are becoming trapped in a cycle of debt, often ignoring the situation until it is almost too late; clearing debts takes time and you will have to start somewhere. There are many ways to provide debt relief but whichever you choose, you must have a degree of commitment to being debt free or it will not work. The best way to beat the debt stress is to learn how to manage your finances more thoroughly.
The most important thing to remember is not to panic and stay focused as this way your decisions will be clearer and more positive. Even if you have taken out a large loan perhaps to pay off previous debts, it is imperative that you continue to pay if you want to clear the outstanding balance.
Create a budget for yourself by adding up all your income, payments and expenses which will help you check where your money is being spent plus your budget will highlight all the small, unnecessary expenses that can be eliminated. The hardest part for anyone in these circumstances is reducing the use of their credit card which is often considered a lifeline but paying for goods in cash highlights how much money is leaving your account and will result in you being more careful.
When your list is complete you will see clearly where you will have excess cash which can be placed in a debt relief fund that will pay off debts one by one and as money is paid off, more will be available for your fund. Also, putting a limit on unnecessary expenses such as entertainment, until the time you have paid off your creditors, any excess money in the repayment fund can be used for this purpose.
There are times when debts are mounting and there is equity in your home it may seem like a good idea to refinance your mortgage and pay off your debts but this just means they will last much longer. You may consider this your only option but if it is just to ensure you have extra cash in your pocket each month, which is ok, just think about whether you really need too.
In the short term some use the cash withdrawal facility on their credit cards to pay for their monthly credit card debts and although this can assist the debt relief situation, it can only be done short term. If re-financing your home does not work then you must consider filing for bankruptcy but this step should not be taken before you take specialist advice from a bankruptcy attorney.
There are occasions to avoid bankruptcy, individuals use the money that has been accumulating in their individual retirement accounts but it has serious consequences for your future financial security. There is far too much to lose with this option so you would be better advised to find alternative answers and learn debt relief methods that are more fiscally responsible.
