There is one thing that everyone should keep in mind when taking out a loan and that is the fact that there is always a chance you will not be able to pay it back. That is why before taking out a loan you need to plan your finances carefully and stick to a very strict budget to minimize the risks of financial troubles that may arise.
Payday loans are particularly dangerous to pay back because they are short term loans meant to be paid off quickly. Failure to do so results in very high interest rates which can quickly result in a financial hole that is very difficult to dig out of. But, luckily for you we have put together this very informative article which will explain how to get out of said holes.
Find your hidden assets
Starting collecting any spare money you may have lying around. That doesn’t mean searching the couch cushions just yet, though that may be an option as the average American has a fair amount of cash just lying around the house.
Begin by carefully examining your utility and entertainment bills and forming a budget to cut back. Cut out unneeded cable channels or any expenses you rarely need or use. Carefully examine every item on your cellphone bill, call your companies and see what you can remove. Resort to the bare essentials.
Also, take a close look at your water, electricity and usage of other utilities. Examine how it may fluctuate from month to month and give yourself strict rules to usage day by day. This should help facilitate hundreds of dollars each month.
Next start digging into any spare cash you have in your savings account. This would also probably be the period where you start searching the couch cushions and selling things you don’t need. Garage sales and swap meets would be an excellent idea at this point.
Don’t be afraid to turn to family and friends at this point as well. A few dollars from each of your loved ones will add up and make all the difference.
Buy down your loan
Now that you have obtained all those hidden nickles and dimes scattered throughout your checkbook and house you’ll want to start taking practical steps to reduce your debt.
A “buydown” is mortgage-financing term. But in the case of loans it is when the borrower seeks to obtain a reduced interest rate for at least a few years of their loan term from the lender. In order to do this you will need to contact your lender and talk about consolidating your loan, working out a payment plan, or adjusting the interest rates so that you can feasibly pay it off.
You will need to express that you will not be able to pay the loan off at the current interest rate due to unforeseen complications or simply a lack of funds in general.
Expect phone calls and prepare to communicate frequently with your lender
Another important thing to make sure that you do is constantly communicate your progress in paying back the loan. If you are in debt, rest assured, staying in touch with your lenders will not be difficult. Mainly because they will be calling you and often. Expect regular phone calls from creditors who may seem rude and pushy.
Bear in mind, as annoying as they may seem, they really do want to help. Be polite and listen to what they have to say. They can often times help you figure out steps to pay your debt. Be consistent in explaining the situation you are in, no matter how redundant it becomes as you will likely tell the same story over and over. As long as you are willing to work with them they will work with you.
Formulate a plan and stick to it
From there you should have a pretty decent plan in place to make regular payments and eliminate that debt. Be diligent, consistent, and stick to the plan, it will pay off in the end. As long as you follow all these steps, be honest with yourself about what you can and can’t afford (nothing) and stick to your payment plan you should be able to successfully get out of the debt hole. Just be patient and do not get discouraged!