Get Out of Your Debt Cycle!
We often get pushed into debt cycles because of losing our job, a reduction in our salary or simply because we want to lead a better, more luxurious lifestyle and take a loan for the same. However, one tiny loan can push you into a debt trap if you fail to repay it with your own earnings, for which you may have to take another loan and the cycle goes on and on.
Why Do We Fall into Debt Traps?
Even though payday loan lenders have simplified one’s returning process by offering flexible repayments in terms of installment loans-which by the way, come with exactly the same benefits as payday loans do and are short-term loans themselves- we often resort to applying for payday loans instead in order to cater to our cash crunch. It may be because we don’t have the time to look for an appropriate lender, another reason could be because a lender who offers solely payday loans may be charging slightly lesser than those offering both payday and installment loans, or it may be because we’re unaware that the latter even exists.
Whatever be the case, we often end up in situations that can make matters worse, wherein it becomes too difficult for us to repay our payday loans in lump-sum on our due date. Sure, one can apply for an extension or a rollover, but do a few extra days really contribute well enough for you to be able to earn more? Seems unlikely unless you manage to borrow some money from a close one.
In order to repay our lenders, we often resort to applying for another loan which is where, the cycle starts. One leads to another which leads to taking yet another loan, and this cycle carries on and on for months, or even years together. That’s when we fall into debt traps, a place where nobody wants to be. What’s worse? If by any chance we fail to repay more than one lender at once, things become worse which also leads to a ton of confusion later on.
Nobody wants to be flooded with debt and a never-ending liability to multiple lenders, but how do we get out of such a trap?
Ask a Family Member or Friend for Help
One way of getting out of a debt cycle is to put your guard down, and ask a family member or a close friend for help. You may feel slightly ashamed to do so, but it is imperative that you get out of your debt cycle as soon as you can. Be honest with your friend- tell him/ her about your situation and try to come to a conclusion wherein repaying them can be easy and flexible, but make sure to pay them back and on time. However, if this seems too difficult a thing for you to do or if you don’t have people who can afford to lend you some money themselves, move to option two.
Cut Down on Costs
Sure, you may be used to leading a certain kind of lifestyle, but is luxury more important than being in debt? Cut down on costs, instead of a personal cab, use a public transport service; instead of buying organic foods, buy regular ones for some time; reduce or even stop partying and dinners with friends for a few days, instead, stay in and binge on tv shows for a while which will cost you 1/20th of what it otherwise does. Change your way of living just a tad and you’ll be able to save and hopefully repay those debts.
Make More Money
This goes without saying, but we’re putting it down here anyway. If it’s possible, take an extra shift at work. What you can also do is sell off a few items at home like a couch that you don’t need or a decently priced watch. Once you’re back on track, you can buy even better things. For now, you must concentrate on settling your debts. If you can’t work an extra shift, take up a part time job even if it just requires you to walk your neighbour’s dog or wash a car.
Don’t Stress Too Much
Getting stressed about being caught in a debt trap is natural and unfortunately unavoidable to a large extent. However, being under stress isn’t the solution to your problem and won’t solve anything. If you’re stressed, you may resort to a few bad habits like drinking and smoking which isn’t only bad for your body but also for your bills, thus pushing you further into debt. Have a clear mind, think about how you’d like to go about things and how you choose to get over your debt. Once you figure that out, you will be able to repay your loans thus ending both- your debt cycle and your stress.
Take a Loan for Consolidation
If none of the above techniques work, this can help to an extent. Many lenders in the market today offer loans for debt consolidation, whose prices tend to be lesser than that of regular loans and funds seem to be higher. You can use this one loan to get your finances more regulated and to pay off multiple debts, in turn being liable to a single lender. However, before taking such a loan it is crucial that you do the math, and well. Take into consideration your income, how much you owe to all lenders collectively, if this loan’s money will be enough to compensate for all your debt or not, how much you shall have to repay to this lender and when, and whether you will be able to repay this one lender on time. Ideally, if you do go forward with taking such a loan, do consider one that offers flexible repayments and not the need for a single repayment. If you do all the math and it fits perfectly, go ahead. If not, we would advise otherwise since this can turn out to be just another form of debt which will push you further into your debt cycle.
Do consider the above options before resorting to debt consolidation loans and take this loan only if necessary and only if you’re sure about being able to repay it on time.