Asked me to write an article for people in the debt trap about their options.
I had to realize that so far I have addressed very little, although most people in this country are concerned.
I would also like to fill this gap in this article.
The situation of the people trapped in the debt trap can be divided into three categories: situations that can be solved, collapsed, but perhaps still salvaged, and ruin cleanup.
The collapsed, but perhaps salvageable situation is something that we would like to discuss with Vakmacsk, so now I want to give some tricks to debtors who are still in a position to be resolved.
The debt trap is a situation that is very easy to walk into
What I am unable to emphasize is that credit will never solve any problem , it will only exacerbate your existing problem by exacerbating your existing deficiency. If you do not have enough income to finance your lifestyle or your needs, this will remain the same after borrowing, you only have to pay interest rates of up to 40-45% from now on, so you are in a deeper pit than you have been.
A loan is nothing more than selling your future earnings at a terribly high interest rate.
(It’s important to note that this article is about indebtedness, where borrowing is only a precursor to future earnings. For businesses, credit can also increase revenue and profitability, a completely different case, this post is not about this. )
In my banking work
I have seen people from all walks of life indebted. Frequent customers with nearly one million net payments a month owed millions of credit cards and overdrafts at the same time.
I also worked in the credit card department, and I met a lot of trapped people who first went for only a couple of thousand forints, or maybe went shopping for a Christmas, dropping off their “free credit” on the credit card. Since then, debt of half a million has been accumulated at 45% interest. (I wrote about the credit card here.)
Therefore, the goal is to get rid of all your loans, especially high interest credit card debt and personal loans.
The easiest thing to do is to double your credit from now on, and then run out of credit once.
Extra wisdom, just completely useless, because an average person can’t repay twice as much.
So what’s the solution?
Like all medicines, this remedy will be a bitter pill, but there is no other way than to cut costs and increase revenue.
Let’s start with spending. First of all, every member of the family needs to write down their expenses so that they can see where and where the money is going. I guarantee that the result will be shocking even after the first month. If you only drink one $ 5 cappuccino a day five times a week at your workplace, that is $ 66,000 a year, and $ 900 at a workplace lunch is nearly $ 250,000 a year. It’s important that you write down all the issues, from the $ 1.00 chew to the parking ticket, and make a summary at the end of the month.
Categorize expenditures into necessary and unnecessary or non-essential categories . For example, what is the required spending in a household? These are water, gas, electricity. What is the Essential Edition? Internet subscription, cable TV and more.
I have often heard in counseling that we need a car anyway, because this is the kid. As if you couldn’t bring up a child without a car. The three of us were brothers, and my father only gave my first Skoda to Mercury at the age of 11. Still, we grew up somehow and even went on vacation every year without a car.
I understand that it is more convenient to drive your child everywhere, or to go to work, but it is very expensive if you are in debt.