Are you struggling with out-of-control debt? Do you dread collecting the mail because it will only have bills in it? Or do you ignore calls from unlisted numbers because you think it might be your creditors hounding you again?
For the owner of a small business, overwhelming personal debt can be toxic. You need to have peace of mind and a clear head in order to be truly effective in your business. However, out-of-control debt can distract you and keep you from achieving your business goals.
If you are in this situation, there is no point in putting things off any longer. Every day that you avoid the issue is just going to make the situation worse. Let’s get a handle on your out-of-control debt, shall we?
How Bad Is It?
Get together all the information regarding your debt. Who do you owe money to? How much money do you owe to each? What are your repayments for each?
Work out a Budget
Now, sit down and write a list of all your expenses, including your debt repayments. Which expenses are essential? Think things like electricity, food, mortgage, car, and so on. How much do you have left over for paying off debt?
Is there any way that you can decrease your current expenses? For example, could you move into a smaller home or sell the family’s second car? Where can you cut back?
This should give you a rough idea of how to move forward now. Have you got enough money to at least pay the minimum amount owing on all of your debt? If not, you might need to consider going to a professional debt counselor and getting their advice.
What they will do is to work out what amount is affordable for you and then help you to work out a repayment plan. They will then negotiate with your creditors on your behalf. As they do, they will get your creditors to accept a reduced payment arrangement. What’s more, they will negotiate with your creditors to freeze the charges and stop calling you.
Stay the Course
The good news is that you get some breathing room. You will, however, have to stick to the new repayment arrangement religiously. You need to demonstrate to your creditors that you are serious about paying back your debt.
The bad news is that you won’t be able to borrow money again until your debt is paid off or brought up to date. Besides, if you borrow more money, it will take even longer to pay off your debt.
At a later stage, if your finances do improve, you could then start to look at repaying your creditors faster. Perhaps you could choose the creditor with the smallest outstanding limit and pay that off so that you have one debt completely paid off. Work your way up your list of outstanding debts until all of your creditors are paid off.
Or perhaps you might want to see if you can increase the amount that you are paying every month.
The most important thing when it comes to paying off out-of-control debt is to remember that you need to work at it every single day. See what expenses you can cut back on, at least for the time being.
Can You Pull in More Income?
Also look at ways of increasing the amount of money that you bring home every month. Can you take a second job? Do you have things lying around the house that you could sell to bring in some money?
Having out-of-control debt is not at all pleasant. However, there are steps that you can take to regain control once again.