Why There Is No “Easy Way” Out of Debt

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Debt is one of the most relatable issues facing people in the United States. Across all generations, the vast majority of people have debt of some kind. There are a lot of people who will tell you they have an easy solution for you to get out of debt. But you should be skeptical of anyone who tells you this. Here’s why there is no “easy way” out of debt.

Bankruptcy Isn’t a Get Out of Debt Free Card

A lot of people go through bankruptcy. In fact, over 770,000 individuals filed for bankruptcy last year. But the normalization of bankruptcy doesn’t mean it’s something that you should willingly allow into your life. Many people make the mistake of thinking that filing for bankruptcy is equivalent to pressing a restart button on their finances. While it can erase most, or all of your debt, bankruptcy lingers for a lot longer than the process itself. For one thing, a bankruptcy will stay on your credit report for years. A ravaged credit score will make your life harder in many ways. You’ll be limited to sub-prime loans when you eventually need to borrow money again. Those higher interest rates will greatly affect how much you pay over the course of a loan.

You Need to Take a Realistic Look at Your Finances

If possible, you should take any available measure to stay out of bankruptcy. Creating a stringent budget needs to be at the top of your agenda. This can be difficult for many people—especially those who have a lot of expenses. Here are a few things you need to do in order to put together an effective budget:

  • Add up all your income sources. You want to include everything here regardless of source. You’ll want to use the after-tax amounts, as this is the true reflection of how much money is available to you.
  • Get together your financial statements. This will include bank accounts, investments, and credit card balances. Find out exactly how much you have, and how much you owe.
  • Total up all expenses. Make sure you differentiate between necessary and non-essential payments. Things like rent and insurance are bills you need to pay each month. Gym memberships and expensive cable plans are things that can be cut, or at least reduced.
  • Look at places where you can cut some fat from your budget. The more you can remove from your monthly expenses, the more you’ll be able to put toward paying down your debt.

Consider Debt Negotiation

You might not be able to get out of debt by just making changes to your habits. Debt negotiation can be a solid option for people who need to put in some extra work. Freedom Debt Relief is one of the top organizations for helping consumers get over their debt issues. They have a long track record of working with creditors in order to reach an agreement that works better for both parties. Some people who work with Freedom Debt Relief will even be able to completely eliminate their unsecured debt in as little as 24-48 months. However, this still isn’t going to be an effortless process. You need to stick to your debt negotiation plan in order for it to actually work to your advantage.

Selling Things Can Generate Cash Flow

A lot of people can expedite their way out of debt by selling some personal items. Many people won’t want to give up their prized possessions. However, this is sometimes the only way to efficiently get out of your debt issues. People who have to file for Chapter Seven bankruptcy will be forced to liquidate non-exempt assets anyway. It’s smarter to sell what you can in order to pay down your debt to a more reasonable level. Additionally, you might be able to just downsize, or downgrade some of your property. If you have a luxury car, consider selling it for a less expensive option. Move into a smaller house or apartment. Doing these things can give you the boost you need in order to overcome your debt.

No one wants to be in debt. But it’s an unfortunate reality of life for millions of people. While we all want to believe in the possibility of a get-out-of-debt-fast scheme, these are always too good to be true. Regardless of what path you choose, you’re going to have to put in some work to overcome your debt.

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