How To Manage Debt When You’re In Too Deep

It’s easy to assume that the countries who get lumbered with debt are emerging markets. But this is not the case, as some of the countries with the highest debt include Japan, Canada, and the United Kingdom. What this means for the ordinary man in the street is that wealth or lack thereof does not create a tricky debt situation. Once in the situation, it’s hard to turn it around but not impossible. Here are a few tricks that just might turn the situation around.

Photo by Aidan Bartos on Unsplash

Manage Your Pride

As far as cultural perceptions go, Filipinos have a strong view against debt. All debt is considered bad. But when financial disaster strikes such as unemployment or severe medical bills, it’s time to muster up the courage and face the creditors. It’s important to ask for help in structuring the repayments as further debt may not solve the problem. Many financial institutions prefer their customers to approach them to try and resolve the issues, as opposed to waiting it out and getting into further trouble. It’s expensive for financial institutions to take legal steps against their customers.

Get Help From the Right Sources

There are unsavory ways of going for debt relief help that may not even be legal. Furthermore, when things don’t work out the consumer has very little recourse or protection. The best way to seek out help is by going with reputable companies. AAA Credit Guide recently released their list of The Best Credit Repair Companies (Updated Reviews – September 2017). This is an extensive list of companies who focus solely on assisting consumers who already have a bad credit score.

Build Up A Rainy Day Fund

This may not seem easy while debt looms, but once all the payment arrangements are in place some funds need to go towards an emergency fund. If this means letting go of some luxuries or non-essentials, then it has to be done. According to Dave Ramsay, the trouble is not always to build the emergency fund but to keep it. Three questions he wants consumers to ask themselves before using the funds are:

  • Is it unexpected?
  • Is it necessary?
  • Is it urgent?

My Say

Financial dilemmas are often resolved when consumers are able to differentiate between their needs and wants. Although some situations are severe and require consumers to start all over, emergency savings will go a long way for many. It is never too late to start saving although some sacrifices would need to be made.

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