Debt is a gradual process that involves specific spending habits, or an unexpected change in circumstances that leads to your liabilities exceeding your assets. Fortunately, there are several products and services out there that may promise relief from debt. Becoming aware of the dangers of uncontrolled lending and learning to discern between permanent debt help and temporary debt relief are both critical steps in conquering debt for good. Let’s look at how you can (or help someone you know) solve the debt problem.
If you are in debt, you have to be quite careful with your finances, since more often than not, unnoticeable factors can worsen your situation over time. Then, without you realizing it, you become stuck with what seems to be an impossible monthly debt repayment and nowhere to go.
The following are some of the common debt traps to watch out for:
Credit cards can be a double-edged sword. They may seem quite helpful when in financial turmoil, but if you fail to manage your accounts carefully, they can make your situation a lot worse.
When the rates are low, it can be pretty tempting to refinance your home. The notion is that you will take advantage of low monthly payments, and you can save more. However, the truth is only the people with the best credit qualify for low rates. Even then, there are other costs and considerations to take into account. For instance, would you like to sign up for another 30 years of mortgage payments? Mortgage refinancing might not necessarily improve your financial situation.
You may not know this, but payday loans represent quite expensive credit. While they may seem to help, they present one of the biggest debt traps. More often than not, a payday loan rolls over into a second loan, then a third, and a fourth before you know it. It could be better to pay late or default on other lower-interest debts in certain situations rather than rely on payday loans for temporary relief.
Making poor financial decisions can make even high earners end up in the red. Those bad habits that you are not taking note of can get you into financial turmoil. Here are the top financial habits to avoid before it’s too late:
Spending more than you make may seem illogical, but it’s easier than you think. Turning to your savings, borrowing from friends, and using credit cards can get you to spend more than you earn, all without you realizing it.
Ever found yourself spending uncontrollably, not knowing if you will have enough money left over. With a budget, you understand what you have at your disposal. A budget is essential to help avoid ending over-indebted.
While using one credit card to pay off other cards might seem like a quick short-term solution, you are not paying off anything in reality. It is only shuffling your debt around. Sometimes you end up paying more than you borrowed overall since there are interest rates involved. The only thing you will be doing is worsening your financial situation.
Whether it is a mortgage, car loan, student loans, credit cards, or medical bills, your debt can get out of hand before you know it. Tackling debt takes time and effort, and while it may seem like a challenging task, it is doable. Here is how debt review can help fix your problematic debt.
With a debt counselling company in South Africa, you can get help managing your debt, and as a result, your finances. If you are trying to pay off debt, a certified debt counsellor can be very helpful. A debt counsellor is a professional service provider who can negotiate with creditors on your behalf to create an affordable debt repayment plan.
Your debt counsellor makes dealing with your debt much more manageable, and with the right help, the process can eventually get you out of debt completely.
A few of the benefits of debt review include: a single simplified debt repayment, a lower monthly debt instalment, an intermediary between you and your creditors, reduces creditor harassment, and protects your belongings from repossession.
If you’re interested in learning more about debt review, check out our Beginner’s Guide to Debt Review, or visit our frequently asked questions page to get a few quick answers.
If you’re over-indebted, this is not the end. A debt-free life awaits. All you have to do is claim it.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.