Not all of us started on the thrifty path without financial baggage. Luckily, debt can be managed and reduced through a few financial tools and attitude tweaks towards money.
Sometimes what kills your budget is not the amount you owe. Sometimes it’s the death of one thousand payments a month. They land everywhere in the month, can be confused with each other, and that makes them hard to plan for. Instead, see if you can get a loan, and then pay the various companies, hospitals, and cards off with that loan. In the end you still need to pay off the loan, but the bill falls at one time and may even be less of a payment monthly than having numerous small payment plans.
Student Loan Forgiveness
Student loans can be difficult to pay off. Sometimes a payment plan will work for you. Sometimes your loans can be deferred for a while due to hardship (though watch out for interest that can’t be deferred!). Sometimes you need to look into student loan forgiveness. The plan that the members of my family has puts our loans in a state of forgiveness for twenty five years based on income. If after twenty five years we haven’t made enough to start making payments, our loans are forgiven. If we do make enough to start paying off our loans during that time, the payments will be based on our income. The company that buys your student loan may take part of your tax refund if you have one, but it’s a small price to pay rather than dealing with the monthly stress of super tight finances.
Hold Off on Big Expenses
Until you have gotten yourself out of the old debt, don’t create any new debt. Lay off using credit cards. Don’t buy or trade up on your housing. Don’t buy a new car. When you pay off debt it may take a few years. In that time learn what purchases are worth debt, are not worth debt, and what type of debt won’t cause harm to your credit rating.
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