Which of us did not dream of luxurious life in a large house near the ocean with a beautiful yacht plowing the expanses of water. We especially pay attention to beautiful pictures from the life of the rich and, frankly, it’s hard to find someone who says that he wouldn’t want to do the same. But there are many cases where all this flamboyant luxury turned out to be a big soap bubble. Everything was bought by people for money borrowed. And when there was nothing to pay, the wealthy property went under the hammer. And invariably there was only one thing left - huge debts.
For many, luxury remains only a dream, but a debt hole is often a reality. We began to get used to living on credit, but did not learn how to manage our finances. Our desires often come off real opportunities to repay loans. What to do if a person has accumulated debts, how can he break out of a debt hole? Our tips will help in resolving these issues.
Try to live within your means
In order not to ask banks for exemptions or refinancing, it is advisable not to allow a problem. After all, this is easier than solving it later. In the same way, it is easier to find a way out at the initial stages of the debt spiral than in a situation where you have accumulated a lot of overdue debts.
Do not take loans if you are not sure of the ability to repay them. Control your finances, do not pursue luxury or ostentatious wealth. So you will not get into debt dependence, and you will not need to look for ways out of it.
But since you needed to go to the bank, then keep in mind that it is advisable to take a loan subject to the following conditions:
- you need borrowed money for really significant goals that cannot be ignored or if they subsequently bring tangible profits,
- you could not find cheaper and more profitable sources of funds,
- You have calculated your personal financial plan and are confident in your ability to repay the debt.
Do not ignore debts
Well, if you scored loans and can not repay them, in no case let go of the situation. You can’t think that your creditors will forget about you and the loans issued. Sooner or later you will have to answer.
One should not hope for the opportunity to declare bankruptcy. Judicial practice is not yet on the side of such problem borrowers. Especially if they do not want to solve their financial problems. Your task is to set the goal yourself - to solve the debt problem.
Assess all the causes of debt
To find a way out and pay the debt, you need to understand the reasons for this situation. Debts could arise due to:
- inability to control costs
- desire to live beyond our means
- inability to plan a budget,
- emergencies resulting in a sharp decline in your income,
- Unreadiness and unwillingness to answer for their obligations.
Having understood the reasons, you can correctly develop a strategy for liquidating financial obligations to the bank, and also determine how willingly the financial institution will make concessions to you.
Specify the total amount owed
A big problem for borrowers is their inability and unwillingness to control their debt. Of course, you can clearly pay debts according to the schedule, but which of you regularly contacted the bank and clarified your current debt?
That is why it is important to immediately find out in your financial institution your debts for each loan. Moreover, it is necessary to clarify separately the data on the body of the loan, interest payments and accrued fines.
Do not avoid talking with lenders
Erroneous tactics will be avoiding communication with representatives of the financial institution and even fear of such contacts. Especially when it comes to collectors. Of course, these experts behave quite rudely, sometimes they do not disdain threats. But this is not a reason to be afraid of them. You need to calmly explain what you know about debts, look for money and are ready to pay everything as soon as the opportunity arises. And in no case do not swear and do not put pressure on pity. These actions are not constructive.
We determine the repayment sequence
To pay off debts, you need to develop a payment strategy. Especially if you have several loans. So you can optimize your financial resources, directing them in the most profitable directions. The borrower can focus on at least three strategies:
- pay the smallest debts and get rid of distractions,
- we repay the bank the most expensive loans, reducing interest payments,
- we pay evenly on all available loans.
We increase our income
It is necessary to conduct a thorough financial analysis of your income and expenses. If you see that there are not enough incomes, you should find sources of funds, for example, get a job or try to earn extra money, including on freelance terms. And perhaps this whole situation is an occasion to change jobs to find a more profitable place?
Step-by-step instructions from Platiza will tell you how to get out of the debt hole and begin the path to financial freedom.
1. Evaluate the situation: why did this happen?
Remember what prompted you to take loans and at what stage it became difficult for you to make payments on time. What would you do then to rectify the situation?
Reason # 1. Borrowers allow delays due to unforeseen circumstances requiring financial investments and lack of free money in a critical situation.
Reason number 2. Life is beyond our means. A person spends more than he earns, not knowing how to deny himself pleasures. Today he does not deny himself anything, and tomorrow he receives overdue loans.
You can live in pleasure if you have loans if you follow the rule of distribution of income and expenses 50/20/30. Read more about it here.
2. Calculate the total debt
There are several ways to do this:
Write down on paper how much you owe money. So you can see the full picture of your financial situation and draw conclusions.
Download the mobile app. Using special applications, you can keep track of all debts. You can contact them at any time, and an alert system will warn you of an upcoming payment date.
Mobile debt accounting applications:
- “Pay back debt” from Alfa Bank
- Debt Accounting
3. Do not conflict with collectors
The delay is stress in itself. Communication with collectors and representatives of banks with raised tones strikes your psyche and does not relieve you of debt. Agree on payment dates and demonstrate your intention to repay the debt. If you pay the debt according to the established plan, the collectors will not bother you again.
4. Refinance loans
Refinancing allows you to combine several loans into one. This is convenient because it is easier to control one loan than several. When refinancing, banks are ready to offer a lower interest on the loan. Contact a bank specialist for advice, and he will offer you options for debt refinancing.
5. Form accumulations
We do not recommend that you spend all your free money on paying off your debt. There are several reasons for this:
When you close loans, you will go to zero and you will not have free money. At this point, there is a high risk of taking a new loan. If you previously saved money, then there will be no need for a loan.
You will form a good habit of saving. You will always have free money and there will be no need to borrow. Most importantly, there will be confidence in the future.
6. Increase revenue
The higher the income, the easier it is to repay debts. A few ways to start earning more:
Ask your employer for a salary increase. Show him your performance, back up words with numbers. If the employer appreciates you, it will encourage your work.
Think about a job change. Use the services of a popular site with vacancies hh.ru. Perhaps there are companies on the market that are willing to pay more for your work.
Find extra work. In a poor financial situation, allow yourself to work more than usual. Take work on the weekend or second shift. Temporary difficulties will make you stronger, and after getting rid of loans, you can again enter the measured rhythm of life.
7. Do not trust the services of “Anti-collection agencies”
In emergency situations, the mind turns off, and the person is ready to pay for any solution to the problem. Scammers know this and are actively using it. They promise to get rid of the loan, write off fines and even clean up the credit history. But this is impossible. The debt will always remain with you, and there is no getting away from it until you return the money. Instead of paying for a miracle that obviously does not happen, it’s better to direct this money to repay the loan and solve the problem on your own.
Platiza advises its customers to take a responsible approach to loan processing. We are against the debt of the population. Before you take a loan, think about whether you can repay the debt on time.
Have you ever had a situation when you had to repay several loans at the same time? How did you deal with them? Share tips in the comments on the article
We hope you realized what brought you into the current situation. This means that you cannot create a new business in order to get out of debt. You cannot throw a cobra and put an apartment on the game of roulette in order to recapture the entire amount at once. It is for such thinking that you are punished.
The worst thing you can do right now is scurry around and panic
Now you need to stop the fall. Stop creating new debts. Stabilize at one point. Surely you will have to cut the “bones”: to lay off ineffective employees, move to an office easier, refuse useless expenses, cut budgets.
Surround yourself with a squad that supports at least morally. Tear off vampires and whiners. People around must maintain a fighting spirit and create a state of victory. It will be of use to you now more than ever.
Go to 10 people who got out of debt. Find out how they did it, ask for advice, be inspired by their successful story.
To stop the fall, we hurriedly left the prestigious office. We had to fire most of the employees. We ruthlessly cut all the expenses that dragged us down because it was a matter of survival.
The next step is to restructure your debts. Reconcile with creditors for new conditions that are comfortable for you: you will give, but later. Set up a payment schedule. Here it is extremely important to choose exactly the amount of monthly payments that you can really ensure on time.
You can not repay more than 30% of your monthly income
Ideal if it will be 10-20%. Debt repayment has not motivated anyone to earn. Too large a payout percentage will burn out motivation.
Don’t worry that lenders do not understand you. Explain your situation honestly and think first of all about yourself: you can give exactly the amount that will be lifting for you, there are no other options. You must continue to live in comfort, albeit without frills, and fully relax.
And one more thing: always-always-always pick up the phone and reply to messages. It is not the debts themselves that are the most angry for creditors, but the lack of attention on your part!
When you agree on new terms of payments, you will have energy for these exact actions. Look for 100% hypotheses in your business that will work and give a monetary result. Refuse unnecessary gestures - now this is an inadmissible luxury.
And remember: 5 years will pass and you will smile, remembering your “hopeless” situation. Like and take action.
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So, you have a certain amount of money and can not imagine how to give. You may not have a business, but you probably have one. You may work alone, but most likely you have employees and they have nothing to pay. Also, sometimes collectors or people with an accent call you and “ask” to repay the debt, or maybe you owe it to friends and they are politely silent.
This is not so important. The important thing is that the situation has reached a boiling point, and you are almost desperate. You poorly see a way out of the situation. Trying to get out of debt is even more addictive to the quagmire.
Is that familiar? This article will help you make a roadmap for getting out of debt.
We have developed a technique POPS for those who are in this abbreviation already, but want to get out. So you need Pyell ABOUTbecome, Pmake a reservation and WITHfocus.
First, be aware of the reasons that plunged you into debt. Debts are created for a reason: they are the result of wrong decisions. This is neither good nor bad - just take responsibility for it. The presence of unmanageable debt testifies only to your inadequacy.
Have you been deceived? You allowed yourself to do this.
Has the crisis struck? You are not prepared for it.
Are all employees gone? You have not resolved a sore point for too long.
Can't pay a loan? You did not calculate the risks when you took it.
If you recall the most difficult situations in life, then there were almost always prerequisites that ripened for some time, but you stubbornly did not want to take them into account. In the same way, your duty arose.
There is a positive side. Duty is a lesson and its mission
to kill take you to a new level.
Our “lesson” came exactly on black Tuesday of 2014, when the ruble collapsed sharply. Our revenue dipped and a cash gap of 65 million rubles was formed.
It was possible to blame the crisis for everything, but we created so many expenses. We rented 2 floors in the elite business center of category A. We increased the staff to several hundred people. We are used to dynamic growth and thought that this will always be the case.
The cash gap has taught us adequate financial planning and cutting off excess.
Where to begin?
1. Admit that you are in debt
Before you take up the technical part, give yourself time to realize that there are debts, but you want to say goodbye to them. Forgive yourself for all rash purchases, late payments and spontaneous expenses. It will hurt at first, but you have to go through it.
2. Create a checklist
Oddly enough, very few keep records of their debt. Most likely, such frivolity is explained by the unwillingness to feel guilty, but if you do not pull yourself together, it is almost impossible to get out of the debt hole. Create a spreadsheet in Google or Excel and deposit all debts into it. Follow this system: creditor name, interest rate, total balance, loan term (if any), minimum payment. Include student loan, credit cards, and other required payments.
3. Number the debts
When you are finished compiling the statement, number the lines in order of priority. This is critically necessary: you will get a clear idea of where to start and in what sequence to carry out the intended steps.
How to prioritize?
Debt, debt, strife. It is very important to understand that there are different types of financial obligations.
1. Divide the debts into good and bad
As a rule, bad debts are reckoning for momentary outbursts: we buy because we want, not because we need. Although there are extraordinary circumstances when you can not do without a loan, but mostly these are excess costs. There are three categories of bad debt:
- Credit card debt
- Car loans
- Consumer loans
Good debt is an investment in the future. They are also divided into three categories:
- Student Loans
- Business Development Loans
2. Decide which debt to close first
I recommend ending bad debts, be it a car loan or a credit card. Try to pay off loans with the highest interest rate as soon as possible. If there are several credit cards, close the one with the highest percentage. So you save more money.
3. Pay in excess of the minimum
Minimum payments drive you into financial bondage, since the lion's share of the deposit is eaten by interest and commissions. Даже незначительная сумма сверх минимума позволит быстрее выбраться из денежных затруднений.
Down with obstacles and excuses
Compiling a checklist and prioritizing is easy. It’s harder not to succumb to temptations.
1. Set a reminder
As Peter Drucker said, "you can only control what can be measured." Debts, as well as the results of the work done, also need to be regularly measured. Start with a weekly reminder: at the signal, go to your table and check the balance. Did the numbers increase, decrease, or stay the same? For example, regular monitoring of a student loan is incredibly motivating. Noting how the total amount decreases, you will become more and more proud of yourself. Set monthly and weekly goals to see achievements and keep moving.
2. Hide credit cards
If credit card debt has become a major headache, urgently get rid of the temptation: remove them from your wallet. Some people take extreme measures and freeze their cards. What for? To gradually break the habit of overspending. In addition, this is an opportunity to think about whether a credit card is needed, and throw it away after the final payment.
3. Automate all current payments
Willpower is great, but it may not be enough. Automate all monthly payments and live with a clear conscience.
4. Plan ahead
For example, if a friend’s birthday or family celebration is approaching, calculate the likely costs. It may be necessary to cut the weekly budget, take a part-time job, or even completely refuse the invitation.
The surest way to get out of debt is to sacrifice some habits. Think about how to save money in order to direct this money to more important goals. Here's how to spend as little as possible:
- Rent a chipper
- Cook yourself and take lunch to work so you don’t go to the cafe
- Unsubscribe from cable television and go to TV shows
- Ride by public transport or by bike
- Lower interest rate
The higher the interest rate, the harder and longer to get out of debt. Do your best to get it down.
1. Maintain a high credit rating
You can agree with the bank on the restructuring or refinancing of debt and soften the terms of the loan. But remember, it all depends on the credit history: if it is spoiled, nothing will come of it. Therefore, try to increase your reputation as a payer:
- Never overdue
- Do not exceed 30% of the credit limit
- Do not get more than one credit card
- Limit your requests: do not take car loans and do not make expensive installment purchases
- Track your credit history through free online services
2. Re-check card usage rules
Many banks provide a considerable percentage when withdrawing cash and do not take anything when making payments through the terminal: the difference can be huge. In addition, the advance service is very expensive: not only interest, but also a substantial commission are charged for using funds over the main limit.
In terms of using credit cards, a preferential interest-free period is often stipulated (from 30 to 55 days), but if you do not return the money on time, the amount of debt increases instantly.
How to End Debt Forever
Planning, discipline, cost reduction are half the battle. It is important not only to get rid of debts, but never to step on the same rake.
1. Monitor and adjust
Do not let yourself relax. Adhere to the prepared anti-crisis program and make changes if necessary. Do not forget about the credit rating. The higher it rises, the more likely it is to refinance on more favorable terms.
2. Earn more
Money can not only be saved. Instead of hunting for discounts or denying yourself a cup of morning coffee, think about how to increase your income. Hand on heart, it’s much easier to earn an extra couple of thousand a month than to steal the same couple thousand from a monthly budget.
Some ideas for extra income
- Talk with management about increasing salaries or commissions. If all else fails, don't be afraid to change jobs. For example, some companies reimburse training costs.
- Search for a side job. You can become a tutor, a Uber driver, or take paid online surveys. There are tons of ways to make money in your free time. After all, you decided to put an end to debts, which means that you are more than interested in additional income.
- Create an online business. Many sites and blogs make money on advertising, referral programs and other online services.
3. Celebrate success
Encourage yourself for hard work and discipline, without which it is impossible to deal with debts. Of course, this is not about expensive gifts and entertainment, otherwise you will not budge. But little joys are necessary for motivation.
4. Set new financial goals
If you have a clear plan for overcoming the crisis and you are determined to implement it, everything will work out. Be sure to celebrate your ultimate victory over your debts, but don't stop there.
Now you can breathe a sigh of relief and focus on your well-being. Set new financial goals to see where to move and where to put efforts.
Hooray, you are free from debt and you can finally dream! Imagine where you want to go, what your own home will be like, or save money for a future pension. Above all, make sure your goals are concrete, measurable, and achievable.
If you read to this place, congratulations. Only a little remained: to develop a plan for quickly getting rid of debts (best of all - once and for all). But remember: fast doesn't mean easy. It’s necessary to withstand restrictions, to struggle with doubts, to overcome difficulties - as with any great goal.
We optimize expenses
The borrower needs to compile a table of his monthly expenses. It is necessary to highlight the primary costs that must be implemented, less important and excessive, which can easily be eliminated. For example, it is advisable in the first place to limit spending on entertainment, the purchase of expensive and often unnecessary items.
A good solution is to get rid of unnecessary things, the sale of which will help you get cash and pay part of the debt. If you have several plasma TVs in your home, then you should consider selling one of them.
Attention! You must turn on austerity mode, maximizing the accumulation of funds for debt repayment.
We are looking for payment methods
Do not rush to get a new loan in order to pay off the debt. Particularly dangerous will be contacting microfinance organizations, where the cost of loans is extremely high. It is also risky to borrow via the Internet, since there is a chance of getting into scammers. But you need to look for funds to cover the debt. It may be advisable to contact friends and acquaintances who agree to lend a certain amount without interest.
In addition, you can contact the financial institution with a request for debt restructuring. Well, do not forget about re-lending, so that you can pay off current expensive debts due to a cheaper loan. You can get information about this from the article “Refinancing loans from other banks: best offers”. But then you will need to carefully evaluate your financial capabilities and plan your family budget.
Introduce a moratorium on new loans
Now imagine that you gradually began to get rid of debt on loans. Many people will immediately have a desire to design new ones. After all, they will become more confident in their abilities. Caution you - do not do this. From now on, you should have introduced a strict moratorium on obtaining new loans. At least until you pay old debts. But then you should not run to the bank if you want to buy an expensive trinket.
We gave you 10 simple tips on how to get out of a debt hole. Whether to follow them or not is up to the borrower. But getting rid of credit debt should be your first priority. This is a vital necessity and financial gain!