Many Americans struggle with overcoming their debts. Student loans, credit card debt, car payments, and mortgages are all taxing for the average middle class worker. However, just because your income is low and your expenses seem never-ending, there are a few ways you can gain financial stability.
Find Solutions For Short Term Or Temporary Problems
Before tackling your larger debts, like student loans or mortgages, it's best to get all the small stuff out of the way. You will need to:
1. Pay off immediate creditors. In order to meet one deadline, you may have to create another. Sometimes, the only way to do this is to apply for a short term loan from a payday loan establishment, like Payday Express. These small loans can actually help to boost your credit rating, and they can get you out of a pinch. However, it's important to pay off short term loans as soon as they are due, because short term lenders take a risk in lending out loans with the promise of a return on payday. In order to supplement this risk, payday loans will have higher interest rates.
Payday loans are best for unexpected problems like broken down vehicles or small medical bills that will affect the ability to earn an income. For some people, their jobs depend on them having wheels or getting well. A payday loan can cover the repair or medicine that would otherwise not be bought. A short term loan, therefore, may be the only thing between a person and unemployment.
2. Create a debt management plan. Sometimes, the best way to pay off small debts is to pay the smallest debt first. Then, you take the same amount of money, and put it toward the next smallest. As these debts are paid, you continue to pay off your other debts with the same snowball-like effect until they are all absolved.
3. Talk to credit card and medical creditors. You can often create payment plans for medical debts, or apply for lower interest rates on credit card bills. The only way to find out is to talk to agents about the best approach to pay off a balance due.
As you get serious about resolving your debt, remember that most Americans get into debt because they do not have any contingency funds in savings. Car repairs or even one trip to the emergency room is enough to break out the credit card, because there simply isn't enough credit in the bank.
Make it a habit to put 10% of earned income into savings, so that when disaster strikes, there is a small cushion to help break the fall. This will prevent you from needed to increase your debt in the future. A small amount on money in savings also makes it easier for you to pay off a payday loan on time, because even if you don't have enough in savings to cover an unexpected expense, you'll need to borrow less.
Create Long Term Debt Solutions
For larger debts, you may need to break out the big guns. Follow these guidelines to make sure you make wise choices about your financial future:
- Avoid using payday loans for long term debts. Remember, you'll need to pay these back within weeks of borrowing, so never spend this money on things like gambling debts, mortgage payments, student loan payments, or large credit card purchases that you will not be able to cover with your following paycheck. Be a responsible borrower, and never borrow if you are not certain you will have the money to return.
- Seek help from a financial advisor. You can help manage debts, especially student loans and credit card debt, by putting it all in one place. This is called debt consolidation, and it helps those who have many creditors to create one payment with a manageable amount. However, with consolidation, you will end up paying more interest over time.
- Keep on saving. After you have a small contingency set aside for emergencies, don't stop putting away that 10%. You'll want to work up to having three months' worth of expenses set aside, so that in the event of a disaster or job loss, you won't have to sink yourself back into the debt hole.