Finding Solutions That Focus On Individual Needs

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Finding Solutions That Focus On Individual Needs

3 things to do to pay off debt when on a limited income

On Behalf of | May 22, 2019 | Uncategorized |

When living on a fixed or low income in the Rockville area, it might seem disheartening to read about people who managed to pay off a seemingly impossible amount of debt in a short length of time. Many of those individuals are able to accomplish that because they had more than enough discretionary financial resources to do so.

You may not make a lot of money, and live paycheck-to-paycheck, but it is possible for you to pay down your debts without losing your home, car or other important assets. Here are some pointers to help you get control over your financial situation.

  1. Do not ignore bills

Taking control of your finances means you cannot act as if your bills and tax debts will disappear. Take time to thoroughly assess your finances to get a good understanding of what your debts are and how much you owe. Once you acknowledge them, you can work on a plan to tackle them.

Write down how much you owe each creditor and the minimum payment required. Do not forget to document your monthly household and living expenses, i.e., food, utilities, rent/mortgage, health care, etc.

  1. Create a doable budget

Once you know where your money should be going each month, you can come up with a budget plan on how to spend your income wisely without creating a larger deficit. Though your goal is to whittle away at debt, you should ensure that your needs are taken care of first before you start allocating any funds to your creditors. Trim away any unnecessary expenses to make your budget more reasonable.

Depending on how severe your financial challenges are, you might want to decide on whether you should make small debts priority over the larger ones or vice versa or if you should focus on paying one debt off completely before tackling the next. Keep in mind that any minimum payment requirements for your credit cards often do not take into account interest charges, so it may make sense for you to pay more than minimum payment to make headway.

  1. Contact your creditors

You may not enjoy the idea of talking about your financial situation with your creditors, but keeping them in the loop can provide you with resources that you might not know about. If you do not inform your creditors of any challenges that are keeping you from honoring your financial commitments to them, you risk them taking legal action that could limit your options and finances down the line.

If possible, look for alternative sources of income such as a part-time job, a personal loan or a debt management plan to make your situation easier to manage and less stressful to deal with. You may even want to examine bankruptcy as a solution if it seems as if your finances require a more beneficial long-term solution.

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