Many people are up to their ears in debt due to economic issues brought on by the COVID-19 lockdowns. Few things are more suffocating than owing money, and the longer it takes to pay your debt off, the more miserable and trapped you tend to feel.
Settling your debt can lift a huge weight off your shoulders, and we’re here to guide you through its labyrinth so you can find the best exit for your circumstances.
- Payday Loans
This is one of the worst debt categories out there. Payday loans are designed to make you dependent, keeping you in a loop of borrow, pay, borrow, pay. The fact that you feel the need to take out a loan is often evidence that you shouldn’t be taking one.
If you can’t afford essential expenses this month, how will you afford them next month when you have a new debt to pay as well? Learn to differentiate between needs and wants and don’t spend more money than necessary.
Look for alternatives to payday loans online and start a rainy-day fund so you’ll have money for emergencies with no interest and no creditors breathing down your neck.
- Credit Card Debt
The convenience offered by credit cards is deceptive. You might think a credit card offers freedom and ease, but the opposite is often true. If you can’t make significant payments, you’ll find yourself dragging a debt behind you for years.
Instead of getting what you want now and paying for it dearly later, why not save up and get it when you’ve got enough cash? It doesn’t cost you anything to save and you won’t have to deal with the pressure of repayments later.
- Student Loan Debt
Countless graduates are in debt and the number is rising. Even after you’ve gained employment, keeping up with your payments isn’t easy. Payment delays will cost you extra, and it’s honestly disheartening to work so hard just to barely make ends meet.
Are you a social worker or civil servant whose job makes the government’s work easier? Well, you’re in luck because you might just be eligible for a student loan pardon.
Got good credit? You can renew the terms of your loan to allow for more affordable instalments. Payment plans are also an option if your debt amount is lower. If you do a bit of research, you’re likely to find a way to improve your student loan situation.
- Income Tax Debt
The government doesn’t play around when it comes to income tax. They will hunt you down and find you if you fail to make a genuine attempt at settling what you owe. They will lay claim to your property or even make it impossible for you to leave the country.
That’s why it’s important to not just sit around and expect the government to read your mind. If you owe taxes, file an extension to show that you’re having trouble paying. Deal with your tax returns like normal and you should be granted an additional six months to pay. Just don’t be surprised if there’s a little fee for that grace period.
Debt doesn’t have to be demonized. It can do a lot of good for you if you manage it well. Investing in immovable property, forming your own startup, studying – all these things are worth being in debt for because they promise a greater return in future.
The problem arises when debt repayments compromise your ability to build a good quality of life. Hopefully, the tips we’ve provided above will help you get the ball rolling in demolishing your debt.