Debt is damaging in multiple ways; it can cause stress, shame, and guilt. Between student loans, credit payments, and car loans, debt can take over your life to the point where it’s greater than what you can afford.
Often, financial struggles can result in bankruptcy. If you’re here, don’t worry. There are alternatives to consider before filing. Here are four ways to avoid bankruptcy and spare your credit.
Cover the Basics
Before coming up with strategies to help you get out of debt, you want to make sure that you take care of your essential expenses. You need a place to sleep, food for nutrition, transportation to help with commuting, and utilities like water and electricity. Staying on top of these essential finances helps you keep your priorities in order without needing to panic.
Reduce Your Spending
To reduce your spending, you want to be aware of your current expenditure and identify unhealthy habits. It’s easy to rack up streaming app subscriptions or splurge on restaurants and shopping, but when you’re at risk of filing for bankruptcy, you must prioritize your budget.
Create a budget by dissecting your pay and determining how much you allocate towards food, living expenses, and transportation. You can then allocate excess funds toward a savings account. Afterward, lock your credit cards in a safe place to deter you from unnecessary spending and opt for cash transactions moving forward.
Sell What You Can
Take inventory of your belongings and assess what you need and what you can sell to make extra cash. Great things to sell include TVs, DVDs, old clothes, furniture, craft supplies, and more. The goal is to bring in enough funds to help you pay down outstanding debt.
Get a Second Job
These days, it isn’t uncommon to come across a college student with multiple jobs to cover living expenses and monthly bills. Some may have up to three jobs to afford their preferred lifestyle and keep themselves out of debt.
Whether you are money on a credit card or are behind in car payments, a second job can be a blessing and curse. Between your studies and your first job, working a second job into your busy schedule may be a challenge. However, temporarily sacrificing some free time can provide you with funding to take on debt and avoid filing for bankruptcy.
The idea of filing for bankruptcy can be intimidating, but it isn’t impossible to avoid! By learning how to avoid bankruptcy, you can gain control of your debt without the assistance of outside sources.