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How to Get Out of Bad Debts

December 30th, 2009

debt-snowball.jpgThis article on getting out of bad debts by the forum user “totaltalli” from DigitalPoint probably will not win any literary awards, but it does provide an overview of what your options are if you have managed to accumulate more debt than you can really afford. This is a common condition sometimes referred to as “credit card hangover” — people tend to overspend during the holiday period just before Christmas and then struggle to pay the bills when January rolls around.


These are the times of the great economic meltdown and during these times, people are having a strong problem managing the expenses and finances. In fact, personal loans and debts are increasing all across the globe. The reason for this is that some people are losing their jobs during this period while others are simply overspending and buying more things than they could normally afford. Many people think that they do not have any other option but to borrow money from the banks or from their credit cards.

One of the major issues with borrowing is the rate of interest that is charged on the loan. These loans may look lucrative and problem-solving initially but people fall deeper into the debt as time passes. However, these days, debts can be reduced in multiple ways. Let us have a look at some of the most popular methods that you could employ to get rid of all your debts. One thing that you need to keep in mind is that you need to keep trying till you find the most viable option to remove all your debts.

You should budget your income every month. This will help you to put aside or allocate money to paying your monthly installments dedicated to your debt clearance. By resorting to budgeting your monthly finances, you can easily figure out where you are spending more than you should and thereby control your spending. It is also advisable to use cash for most things and only when you have something really important to do and you do not have any cash, then you use the credit card. If you are using a credit card, make sure that you clear off the dues and pay the balance in full every month. If your credit card dues keep piling up, you will eventualy end up in loads of unwanted situations. This usually happens because the rates of interest that are charged on the credit cards are exceptionally high.

You could try to get a second job for yourself. Most of the people earn extra money by doing two jobs. This increases their income and helps you to meet your expenses and other necessary payments without any difficulty. The next thing that you could try is that if you have your home, you can use it as equity and get a secured loan. You could use this to pay off the dues on your credit cards. Since secured loans are charged at a lower rate than unsecured loans like most credit cards, it will reduce your monthly payments. If you are in the business of selling any gadgets or equipments, then you can raise money through this as well. In fact, you can sell the gadgets that you do not use and thereby make money. This is one of the ways that people employ to make money on eBay.

There is another final method that you could employ only if there is no way of making money. It is filing for bankruptcy. You can get immediate relief from all your debts but then you will have to build your credit rating from scratch again. You may have issues to get a loan or mortgage or even a credit card. But then if there is no other option, you may have to opt for this.



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