When stressed out about debt and a mounting pile of bills, paying it off can seem like a daunting task. This is particularly true if you incurred these bills and credit card debt a while back. Many creditors utilize aggressive tactics including sending notices and calling you multiple times a day on the phone, it’s natural to panic about losing everything—including your home.
However, we have some hopeful news: with diligent planning and a strategic approach, you can say goodbye to debt forever and walk into a brighter future. You can achieve financial freedom. Daniel Ciment, a recognized consumer advocate and attorney throughout the state of Texas, has been helping clients with bankruptcy, debt collection defense, and consumer protection for over 15 years. Below, he shares five critical steps you can take to get out of debt.
1. Stick to A Budget
Creating and sticking to a realistic budget is your first step in the direction of financial freedom. Write down your monthly income and expenses to figure out exactly how much money you make and spend every month. Your budget must include all fixed costs like rent, mortgage, insurance premiums, and car payments, along with varying expenses like groceries, clothing, and your electricity bill. Be honest with yourself. Do not ignore or wish away the repetitive and frivolous expenditures you make.
The purpose of this exercise is not to assign guilt or blame but to determine the monthly minimum amount of income you need to pay for necessities such as housing, healthcare, and food. After that, decide which nonessentials you can live without and redirect that money toward paying your debt instead.
After you have created your budget, it is important to track and manage this budget on a regular basis. These regular check-ins will give you an idea of your comfort level. For example, many clients utilize the 50/30/20 method: 50% of your income is for needs and bills, 30% of your income is for wants and fun, and finally 20% is for savings and debt reduction. This plan may work for you or you may need to tweak these percentages based upon your needs and preferred timeline for your debt repayment plan.
2. Design a Debt Repayment Plan
Once you set your budget, determine how much you can spare every month to apply to your debt. List all debts, including interest rates and current standing. To begin, calculate your minimum payments because it is vital to pay the minimum each month.
Whatever remains of your excess funds, you should apply to any accounts not in good standing. You could negotiate with your creditors to reduce your balance—but we’ll get to that in a moment. After past-due balances, focus on the highest interest accounts.
You can either:
- Transfer that debt to a lower interest option; for example, a low intro-APR credit card
- Pay as much as possible on the account each month while making the minimum payments on other accounts
Much like your budget, it is important to track and manage this debt repayment plan on a regular basis. These regular check-ins will give you an idea of your timeline and when you can expect to pay off your debt and in turn, finally get out from under the weight and pressure of this debt. Many credit card companies offer financial calculators on their websites that can help you with understanding how paying more than the minimum will drastically reduce your debt repayment timeline. Referring back to your plan and budget often will keep you on the right track to financial freedom.
3. Cooperate with Your Creditors
It can seem tempting to evade your creditors when struggling to pay off debt, but that’s not a good option. Instead, inform them about your situation and attempt to make a manageable payment plan.
If you can’t meet your mortgage payment obligations, talk with your lender to see if you can work something out. Perhaps your plan will temporarily reduce or suspend payments or agree to an extended repayment period with lower monthly payments. Before committing to anything, ask about any additional fees involved and how they will impact your total debt amount.
Suppose you have secured debt tied to a specific asset, such as a mortgage or a car loan. In that case, the lender can foreclose on your house or repossess your car. In this scenario, selling your car to pay off the debt might be better to avoid excessive penalties and a reduced credit score.
4. Get a Side Hustle
If your current income isn’t enough to make a dent in your debt, increasing your income is your next option. In today’s gig economy, it’s easier than ever to find side jobs to work in your spare time—from delivering meals to writing web content.
Keep in mind a side gig is temporary. You only have to stick with it until you settle your debt. You could also classify your efforts as a business and claim specific business-related discounts on your taxes, like a home office deduction. That could lower your tax liability and even lead to a refund—providing even more cash to apply to your debt.
5. Enroll in Ciment Law Firm, PLLC’s 3 Step Proven Process for Debt and Credit Freedom
Whether creditors are harassing you or you simply feel overwhelmed by debt, our debt assistance attorneys are here to help. At Ciment Law Firm, PLLC, Texas Consumer Protection, we apply our experience and knowledge to assist clients with a diverse range of debt issues and financial legal challenges. When you choose Ciment Law Firm, PLLC, we will immediately get you on the right track with our proven three-step process. Our proven three-step process helps you resolve your debts, protect your rights, and rebuild your credit.
In Step 1, we resolve your debts. Depending on your unique circumstances, this could involve:
- Debt Lawsuit Defense
- Bankruptcy Protection
- Debt Protection Program
- Debt Assistance Program
- Bank Garnishment
- Student Loan Assistance
- Judgment Lien Release
In Step 2, we protect your rights.
- Fair Debt Collection Practices Act
- Texas Debt Collection Practices Act
- Telephone Consumer Protection Act
In Step 3, we rebuild your credit with 7 steps to a 720 Credit Score.
Learn more about each step and how our 3 Step Proven Process puts you on the path to financial stability.
Drowning in Debt? Ciment Law Firm, PLLC Texas Consumer Protection, Can Help
Are you drowning in debt? Are you looking for a bankruptcy, debt collection defense, and consumer attorney in Katy, Texas? Ciment Law Firm, PLLC, can help you resolve your debts, protect your rights, and rebuild your credit. Call (281) 937-3949 to reach us at our office or contact us through our website for a free consultation.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.