How to recover from or possibly avoid bankruptcy
Every person yearns for financial freedom. Financial freedom comes with so many advantages. Who doesn’t like the fine things of life that money can afford? Working smart, saving and reasonable spending are some of the things one should keep in mind if they want to attain financial freedom.
With the rising cost of living, everything has gone up. The cost of living has also gone up. Not only are small businesses struggling, but also individuals. Health care has gone up, fuel prices have gone up, the cost of food has increased and basically, everything has increased in terms of prices. To make it even worse, lenders have also increased their interest rates.
Below are a few tips to follow in order to recover or possibly avoid getting bankrupt.
1. Cut your expenses.
You must discipline yourself when it comes to your expenses. A lot of people go into debts because they spend more than they earn. You must work towards spending less. Create a plan, draw a budget and stick by it regardless. Only buy those things that are very necessary.
Needless to say, one must also learn to source for things that are less costly. Unless your account is overflowing and a few coins do not bother you, then each coin saved is a step towards achieving your goal. Cut on all the unnecessary things, cut on your consumables as well. Avoid spending unnecessarily, for instance, take your coffee from home instead of buying one, and carry your own lunch to work instead of buying. This will surely save a few coins for you.
2. Draw a budget.
Draw a reasonable budget. Include everything that you will need and work on buying only the items and things that are in your budget. Remember your main goal is to get out of debts, have savings and attain your financial freedom. Cut all the extra costs and channel them towards your savings. Go through your stuff and sort them out.
Identify the things that you have that you really don’t need. If they can fetch you some good money, then why not sell them. Everything that you really don’t need can be turned into quick cash. Start with electronics, then accessories, furniture, and even clothes and jewelry. Stop subscribing to things like the internet and television cable unless it is very important, I know. Your aim is to get out of your debts and start saving so that you can improve the quality of your life.
3. Clear your debts.
Channel most of your earnings towards clearing and settling your debts. Start with the highest amounts of debts and work your way slowly to the lesser ones. Keep in mind the urgent ones that have higher interest rates, settle those as soon as you can. Avoid taking more loans and instead concentrate on cutting down your expenditure and increasing your savings. Do away with the things that you do not need and only keep those that are important.
4. Meet your creditors.
Speak to your creditors if there is a need to. Explain to them your financial situation, give them a layout of how you intend to clear their debts and the duration it will take you to do. Be as practical as you possibly can. Be honest about it too. Do not give them too many expectations or make promises that you cannot keep. Stick to your plan and ensure you keep the end of your bargain. Negotiate for lesser interest rates.
5. Consolidate your loans.
Find ways that you can consolidate your loans. The aim of consolidating your loans into one is so that you can reduce your monthly interest. Your goal is to have minimal expenses as much as possible. This will help you a great deal in reducing your debts. Consolidating your loans means you will pay lesser per month or according to your loan terms than you were paying before.
You can even seek help from an expert to talk to your creditors for you. This is because talking to creditors can be a difficult task. There are so many companies that offer this services. They will basically go through your credit terms and conditions and try to negotiate to get you a better deal, with lower rates.
6. Seek financial guidance from an expert.
You may also just speak to a financial advisor so that you can get guidance on how to handle your finances. The advisor can also give you incredible tips on how to clear the debts, which ones to start paying first and which ones to pay later on.