Are You Heading for a Debt Catastrophe?
We live in an “instant gratification” society where social media feeds our desire to own the last gadgets and big-ticket purchases. A hundred years ago, people earned money to buy food, keep a roof over their head, and not much else. Only rich people spent money on clothing and other non-essentials. Today, we love to spend, spend, spend, and burn through our disposable income like there’s no tomorrow.
The easy come-easy go philosophy is socially acceptable, but can easily lead us into debt. Of course, you want a new kitchen or a better car, but unless you have a high level of disposable income, the reality is that you will most likely need to borrow money to pay for expensive purchases. The problem is that taking out a loan or spending money on credit cards has never been easier.
Interest rates are at an all-time low, which makes borrowing cheap. Current mortgage rates NJ are attractive to borrowers looking to refinance their home to pay for a home improvement project, but if you borrow beyond your means, the penalties are severe. Unfortunately, this is all too common. People see it, want it, and then buy it, without really thinking about whether they can afford to spend the money. In the short-term, frivolous spending is not a massive problem, but if the habit continues, it will not be long before you end up in serious debt. The important thing is to recognize the signs of a debt problem.
Borrowing from Peter to Pay Paul
Borrowing from one credit card to pay another is a classic sign of a debt problem. Another bad sign is failing to make repayments on loans or final warning letters piling up on the mat. Too many people ignore these signs. Instead, they naively hope that their problems will go away. Sadly, debt won’t disappear unless you deal with it, so now is not a good time to stick your head in the sand.
Income and Expenditure
If you are concerned about debt, the first thing to do is sit down and look closely at your income and expenditure. Pull out your bank statements and checkbook. Go through every transaction over the last three months and itemize where you spent your money. Does your expenditure exceed your income? If so, you are on shaky ground, as it won’t be long before you sink even deeper into debt.
Look at where you can make savings. For example, if you spend money on take-out coffee on the way to work, make your own coffee instead. Cancel the gym membership you don’t use and see if you can reduce your overheads. Maybe you can save money by moving to a cheaper apartment in a less desirable neighborhood, or perhaps it is time to ask your boss for a raise. Either way, being proactive is better than doing nothing.
Cheaper Borrowing
Once you have identified where you can save money on your monthly household expenditure, the next task is to look for cheaper ways to borrow money. You are not looking to borrow more money. Rather, you need to consolidate existing loans and reduce your monthly repayments. One way to do this is to take out a loan that pays off all of your existing debt and reduces it to one monthly repayment. This is usually cheaper and easier to manage than paying several different credit cards and loans over the course of one month.
If your credit rating is reasonable, it shouldn’t be too difficult to find a suitable product, but if your credit record is shot to pieces because you have defaulted on numerous loans, speak to a specialist lender.
Debt Counseling
Debt counselors are there to help people struggling with serious debt. They won’t judge you, so don’t worry. Debt counseling services are open to anyone from any background. A debt counselor will look at your financial history and help you find ways to solve your debt problems. They can speak to your creditors and negotiate a better deal on repayments. They might even be able to have some of your debt written off.
If you are in serious debt and you don’t know which way to turn, do not ignore the problem, as it won’t go away. Serious debt ruins lives and can lead to homelessness. It is important to seek help if you are struggling to pay the bills and you have taken out loans you can’t afford to repay. Make that phone call today and take the first step towards a better future.