Credit card debt is something that should be avoided at all costs, yet taking into account the times of economic insecurity it is no surprise that people resort to maxing out their credit cards. Times are tough, not to mention that there are no great jobs for those with a college degree. Today’s graduates as well as their families struggle with minimum wage and do not resist the temptation of using their credit cards once they are paid down. While some manage to pay down their balances, others quickly become unable to sustain their lifestyle. When this happens, they take risks to pay off debt. Taking risks to get out of debt is not the answer. If you are facing a financial challenge, you should avoid the following strategies.
Paying the minimum each month
Refunding just the minimum each month is not only expensive, but it is the slowest way to reach your goals. Even though this strategy is cheaper compared to others, it will take you ten years or more to pay back the original balance. Practically, it will take you forever in order to give back the money that you owe. Equally important is mentioning that you will pay a higher interest rate. The idea is that if you want to resume your life you should try to make an effort to make more substantial restitutions. You will have to make some financial sacrifices, but at least you will get rid of your heavy burden.
One of the biggest mistakes that you can make is to increase the loan amount. A loan may seem like a good idea, but the truth is that in the end you will only pay more. It is important to bear in mind that the interest rate is high, so the likelihood is that you will not be able to get out of debt. What you should do is ask the credit card company to make an extension on the loan and possibly to decrease your rate. If you still want to take on more credit, you should at least make sure that you qualify for a minimum installment. There are better ways to pay off debt.
Miss mortgage payments
Taking into consideration that the house is the most valuable asset, it is essential not to miss a mortgage payment. Even though you gain extra time, there will be consequences to face. To be more precise, you risk foreclosure, which means that you can possibly lose your home. You should not walk away from your responsibilities, even though you are drowning in debt. If you cannot keep up with paying the bills you should get some sort of help.
The bottom line
To conclude, you should never try the abovementioned techniques. If you are struggling with collectors, you are better off handling your debts with the help of a debt relief company. Not only is this approach faster, but also efficient. You will no longer have to fear calls or letters coming from creditors. On the contrary, you can go back to enjoying your life.