Debt is an obligation between the two parties. The debtor is the one responsible in paying money or other agreed-upon value to another party, which is the creditor. It is different from an immediate purchase because it is a deferred payment, or series of payments.
Debt is a lower cost source of funds and it is not only the common people who avail it but corporations and the government as well. When national debt is used appropriately, it can be used to foster the long-term growth and prosperity of a country.
In the United States, total consumer debt that includes mortgages, auto loans, credit cards and student loans is now at $14.9 trillion. In June 2021, a CNBC report stated that the average American has $90,460 in debt. American’s personal debt is indeed growing closer to its 10-year high back in 2008 because of the worldwide economic woes we are facing today.
Most of the emergency spending whether of a person, a corporation or a government is funded by debts. Amidst this pandemic, most of us are finding it hard to pay for it because of continued lockdowns, quarantines, health restrictions and other economic problems. We have to do something about it to somehow ease the burden brought about by debts. Here are some tips.
Consider Debt Relief
Debt relief is the partial or total forgiveness of debt. It also means the slowing or stopping of debt growth, owed by individuals, corporations, or nations. When looking into debt relief, always be careful and make sure that you understand how the program works. Also, be keen on the potential risks of enrolling in it. A lot of companies and organizations are offering programs that aren’t really helping you reduce your debt but instead put you more in debt. Make sure you understand what the company is offering, such as a consolidation loan, credit counseling, debt settlement, or something else.
You may also consider refinancing. A consolidation by taking out a new loan to pay off your other loans can also be an option. Remember that a debt consolidation loan does not erase your debt. Make sure that you are given the right program so you wouldn’t end up paying for more.
The best way to ease the burden of your debt is to cut on spending that aren’t really essential. Eating out less often is one. Give extra effort and cook or prepare your own food to save. For important occasions and celebrations, you can do it at home instead of dining in restaurants. You may also want to review your subscriptions. You might be paying for some services that you are no longer use or needed.
Don’t Forget to Save
Amidst this economic downturn, we still need to find a way how to save even a very little amount so we don’t accumulate more debts in the future. Side hustles are a good source of additional income and that’s where you can get additional funds. Apart from saving money, save on resources too like electricity and water. Check on how you spend for your groceries, too. Look for cheaper options but same quality. Better to shop local and shop produce that are in season. There are a lot of ways to be frugal nowadays. Just look around and prioritize the needs before wants.