Your financial affairs can spiral out of control, no matter how hard you try to keep them under control. Bad decisions, exhausted
Market downturns, illnesses, layoffs, or unexpected large expenses can quickly push us over the edge.
What can you do when you’re up to your neck in debt to avoid total disaster? None of your options are particularly desirable. But sometimes you have to bite the bullet and take control of your debt to get ahead. Here are four courses of action to consider.
sell assets
Do you have something of value that you can sell? Anyone who has been to a garage sale knows that most household items will fetch you next to nothing. But on eBay, those same products are priced fairly.
If you have artwork, valuable jewelry, a coin collection, or real estate, you can raise some real money.
How about the second car, snowmobile or RV?
Do you need a car? Can you travel by bus or metro until the crisis passes?
If you’re having trouble paying off your mortgage, maybe you should sell the house yourself before the bank forecloses on it. Pay off your debts and buy or rent a smaller house or move to an apartment.
Win more
Sometimes you have to do what you have to do. When I started practicing law, I got into a lot of debt. Although my wife and I worked, we couldn’t handle it.
I have an adult newspaper route, one with several hundred houses that you drive through. I had to get up at 4:30 in the morning, seven days a week, and was often very tired, but I earned enough in about eight months to keep things under control.
Now there are more ways to earn money part time. You can sell Avon or Mary Kay. You can set up a business selling products on eBay or other online auction sites. You can set up an affiliate website and earn commission by selling famous brand products and services.
Having a home based business can also help with your taxes. Being self-employed is a great way to take control of your life.
You can do tax returns at night at H&R Block or one of their competitors, or you can earn money by turning a hobby into a part-time business. Or you can work part time at Wal-Mart or McDonalds.
Sometimes additional training will help you earn more money. See if your employer offers training. Or check job banks and community colleges to see what courses you can take to make yourself more valuable to your employer.
If you live in an area where jobs are scarce or don’t pay well, why not consider moving to another part of the country where the economy is booming?
Refinance your debt
If you have equity in your home, you can refinance your mortgage or get a second mortgage or home equity line of credit. There is no point in doing this unless you take control and make other tough financial decisions.
The first would be a true commitment to stop spending with credit cards. Cut your cards, close the accounts and do not request new ones. Buy only what you can afford with cash.
You must take the income and pay your bills. Apply the interest savings to a new savings and investment plan.
The reason most financial experts disapprove of the refinance option is because most people who do refinance simply use it as another source of credit. They can pay off the debt with the income, but then they continue to use their credit cards and soon they are in worse shape than before.
You will lose your home if you do not handle this option correctly.
You can get unsecured debt consolidation loans. However, the interest rates you will have to pay make it unlikely that you will save much money.
If you have money invested in a 401-K plan, most employers allow you to borrow against it. You pay interest, but that interest is paid to you.
Most financial advisors think it’s a bad idea. If you are suddenly laid off, you have to pay the money back properly or face some nasty tax consequences.
If you feel secure in your job and if you can continue to make your normal 401K contribution while paying off the loan, this is something to consider. If you stop making your contributions, the long-term loss in the growth of your investment will dwarf the amount you borrow.
change your lifestyle
Do you really need two cars? Do you have to buy a new one every few years?
Can spending be reduced? If you want to take control, you can.
One way to learn is to write down all the expenses you make, no matter how small. Balance your books every night to make sure you don’t forget anything. After a week or two, study the list and see what you can do.
Need an extra $200 a month to pay your bills? If you eliminate the double latte every morning and store it in a brown bag, you might just have the extra cash you need. Or if you ditch cable TV and cell phones, get a dial-up Internet connection instead of broadband, increase the deductibles on your insurance policies, and/or reduce restaurant meals, you can free up hundreds of dollars a year. month.
While it sounds bad, bankruptcy is worse.
Here are some lifestyle calculators to show you what a big difference small changes can make.
starbucks calculator – http://www.hughchou.org/hugh/calc/coffee.cgi See how much you can save by skipping the double latte.
The smoking calculator – http://www.hughchou.org/hugh/calc/Smoking.cgi See what quitting smoking can do for your financial health.
the lunch calculator – http://www.hughchou.org/hugh/calc/lunch.cgi See what you save by packing it in a brown bag.
The Name Brand vs. Store Brand Calculator – [http://www.ndcu.org/pfcu/calcs/jpensave.htm] See how small changes add up when shopping for clothes.
None of us wants to do any of these things. But if you take control, especially early on when you’re not too desperate yet, you can get yourself out of your hole.