What if, after paying all your mandatory obligations for the month, you don’t have 20% of earnings left over to place in savings? You might have a large amount of credit card debt. Or you (or a family member) got sick and you’re saddled with extravagant medical bills. Perhaps you were laid off. Or you have a penchant for expensive clothes or accessories and are living above your means.
If you are in this situation, do not despair. There are realistic solutions to getting you out of debt.
Last Resort: Bankruptcy
What if the amount of your debt feels insurmountable? You’ve crunched the numbers and don’t see the light at the end of the tunnel. Bankruptcy is an option for you. Bankruptcy was put in place to help individuals and companies that have gone too far out into the debt abyss. Think of bankruptcy as providing a clean slate to your financial woes. If you feel comfortable doing research and filling out forms, you can file foe bankruptcy yourself and save yourself legal fees. The great thing is all the information you need is available free of charge on the court’s website.
If you do not feel comfortable filing for bankruptcy the “self-help” route, then contact a legal document preparer to fill out the documents for you. Do some research into reputable document preparers in your area. Make sure the preparer you select is registered with the Secretary of State. This is a mandatory requirement by the state of California. By circumventing the attorney, you will save considerable amounts in legal fees.
Bankruptcy should be your absolute last resort to obtaining debt relief. It is not to be taken lightly and should not be abused. But it is also a great way to provide you with some breathing room. These laws were created to provide relief. The downside is that once you file for bankruptcy, your credit score will take a hit and the bankruptcy will show up for 7 years on your credit report. But this is not necessarily a bad thing: think of these 7 years as a way for you to start building better money habits. It’s a way to establish a new beginning for a financially secure future.
There is no worse feeling than losing control over your finances. You feel like you’re spiraling out of control into a black hole of debt. You feel depressed, ashamed and like a failure. Use those feelings of despair to fuel you to a better future for you and your loved ones.
Take the first step to alleviating your debt by making small changes to your daily life. You must have a serious desire to improve your finances if you want to see results. You have to really want it. Use that fire in your belly to achieve financial freedom. Aim for early retirement. We’ll delve into ways to save for retirement in future posts. And no, it’s never too early to think about saving for retirement.
Check out these useful links re: Alleviating Significant Debt
33 Proven Ways To Reduce Your Debt
Young Finances: Simple Personal Finance for Millennials
The Motley Food: To Educate, Amuse and Enrich