Check if you are making the following mistakes which can prevent you from getting out of debt. How to avoid these mistakes? Read our advice.
Credits and loans for debt repayment.
Many people look for a credit or loan to repay other liabilities. This is the most typical and most common mistake made when trying to get out of debt. Looking for a new credit to repay the previous one is like curing poisoning with the thing that poisoned you. As a result, we only increase the debt, gradually getting into the debt spiral. Instead of taking out new loans, you should analyse the available funds in your household budget and, above all, look for possible savings there. This way, it is possible to find the missing funds for the repayment of debt already at this stage.
lack of diagnosis of the household budget.
Every person or family should regularly analyse their household budget. You should make a statement of our income and the amounts we spent every month. It is important to plan higher expenses in advance and make provisions for the unexpected ones. Indebted persons rarely have a habit of keeping a household budget. As a result, money are spent impulsively, without a priority or plan. Lack of control over the budget is one of the factors of making hasty and irrational financial decisions and, consequently, the reason for getting into debt. We can make a quick and simple diagnostics of the household budget on our own, e.g. by analysing our income and everyday expenses. Often we can find in it a lot of saving opportunities and used saved money to repay the debt.
Avoiding contact with the creditor.
In a situation when we are already in arrears with payments, avoiding contact with the creditor is one of the most common and serious mistakes. As a result, instead of controlling the situation and finding common solution with the creditor, the problem escalates. The creditor takes different measures aiming to recover the liabilities and the costs thereof and related interest increase day by day.
The basis for the actions of an indebted person should consist in the attempt to come to an understanding with the creditor. We can contact the creditor or the company managing the debt, which may enter into dialogue on behalf of the creditor and help to break the deadlock. The willingness of the indebted person to talk and look for solutions is key. Remember that there are people on the other side of the phone line. They have the possibilities and tools that will enable the indebted person to solve the problem without the necessity to take out new loans.
So, if you fell into debts, collect the required documents concerning the debt and other financial liabilities. Carefully analyse your family's expenses and income. Then contact the creditor as soon as possible and learn what are the possibilities of repayment.