Reducing your debts is an important part of managing your finances, but if they’ve become overwhelming, you may be starting to consider bankruptcy. Before you decide to take that path, consider a few ways to reduce your debt liability to see if you can pay down your debts on your own. If you can, you’ll keep your credit rating high and avoid a mark on your record for taking bankruptcy.
In 2013, the U.S. outstanding consumer debt was close to $3.1 trillion, and individuals of Generation X were reporting debts of over $100,000 on average. How can you manage such major debts successfully? A few tips include listing all your debts, allocating money for those debts and stopping spending any money you can avoid spending to save for those debts.
Consider what’s necessary in your life. Do you have 500 cable TV channels? You could afford to reduce your channels for a savings on your cable bill. Or, you could get rid of your bill altogether and only use your Internet to stream movies and popular shows.
Once you list out everything you owe, you can take the money you’ve been able to save in other areas and allocate it to that debt. The $50 you saved on your cable bill can now pay down an outstanding credit card debt or student loan. Simple changes like this can help you get ahead, so you’re not trapped in debt for a lifetime.
If these changes aren’t enough to help you get ahead, then bankruptcy is an option. There are several kinds to consider, so you’ll want to learn more about them before you decide how to proceed.
Source: USA Today, “How to reduce your debt,” Eric Hutchinson, accessed July 01, 2015