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Avoid These Mistakes When You Are Under A Debt Burden

Avoid These Mistakes When You Are Under A Debt Burden

We live in a debt-ridden world where credit cards and bank loans are the new norm and the fact that they provide us with a much needed financial impetus in times of need adds to the increased inclination to opt for them. They provide us with financial semblance and help us to cover those purchases that we don’t have the money for right now, but we can certainly cough up in instalments over a longer period of time.

But, sometimes we do find ourselves under a debt burden as we skip on one or two of our payments and that added debt just continues to keep piling on and on, making our financial position highly vulnerable. We find ourselves under intense pressure due to the constant phone calls and notices to settle our outstanding debt, and in that very time we often commit mistakes that prove very costly in the long run. When we find ourselves under a debt burden, we should think with a steady mind and take note of tricks to get out of debt without haphazardness. These are the decisions you need to absolutely avoid when you are in debt:

1. Mortgaging Your Home

Real estate always has a considerable value and is one of those commodities that is zipped up fast in the financial world due to the demand supply gap in housing markets. But your home is the place you stay in and you bought it for that very purpose – you should never mortgage it to get a loan to pay your outstanding debts.

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This is the biggest mistake that people stuck in debt usually make. Leveraging your home to pay up your debts is never a good idea because that money will be given towards your creditors and you will end up creating another debt to settle the previous one and this time round, your house will be at stake. Even the slightest mistake here will deprive you of your precious house and render you homeless to bear the brunt of rentals and save again to get a new one for you and your family.

2. Borrowing Money From Your Acquaintances

We often look towards our friends and family for support in times of need and it’s a great feeling to know that someone has got your back, but having to borrow money to settle your debt burden from your close ones should be your last resort as this is a dangerous position to be in.

You borrowed money from your friend and there is no interest involved. You settled your loan but now if you don’t pay your friend on time and it gets late, you will end up compromising a precious relationship just for the sake of money and will still be left with a loan to pay to him or her. Never indulge in such practices as relationships are precarious and can be affected quite easily by disagreements on the pretext of the slightest of grievances.

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3. Opting for a One-Time Loan Settlement

Most of the financial institutions today keep the option of a loan settlement open for all defaulted loan payers so that they can get most of the money out of this transaction and close the account which keeps troubling them. It’s a great proposition for the loan houses but not so much for you as all of your credit and debt details land up on your credit report, which is a sort of financial resume for your future loan applications.

Getting a loan settlement will not only make your credit score drop down but will also highly affect your credit report. The transaction you just made to settle that loan will remain there for the next seven years and will render you unable to get another loan for yourself in the future, no matter how severe your need is that time.

4. Using your retirement savings

Most of us are of the perception that retirement is a far off thing and we have enough time on our hands to take care of how we end up after we are no longer suitably aged for the jobs that we hold. Hence, we think of using our retirement savings to settle our debts and this idea is also propelled by the fact that this is our money anyway.

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What we don’t realize here is that, our future selves are dependent on the actions we take today and that money takes a lot of time to compound. Taking money out of our retirement savings and then starting again from scratch will considerably lessen our money’s compounding power and we will be left with a lower amount than we require once our retirement becomes a reality.

When you get credit on a regular basis to fuel your lifestyle, debt accumulation becomes a high possibility but you are not alone. There are millions of people out there who default on their payments. It’s not good to do that but it does happen and people do get out of it without damaging their personal financial buffers.

Debt burdens definitely put us under a lot of pressure and anxiety, but things that took time to go wrong, will take time to come back in order as well. Discipline is the key here, keep maintaining a budgeted lifestyle, utilize discount offers, try earning more money through freelancing and don’t indulge in impulsive buying. Keep doing these things for a few months and the debt will take care of itself, leaving you with a high degree of experience and a sense of pride over how you handled the situation.

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Featured photo credit: Empty Pockets/Dan Moyle via flickr.com

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Muhammad Bilal Shahid

SEO Consutant and Marketing Manager at Dream Products Creation

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Last Updated on August 15, 2018

30 Fun Things You Can Do This Summer Without Spending Much

30 Fun Things You Can Do This Summer Without Spending Much

Summertime can be a real strain on your wallet. The sun is out, there are people to see, places to be; it’s no wonder you might be short of funds during these sunny months. Not everything has to cost you an arm and a leg.

Take some time to go through this list of 20 cheap summer activities and make some realistic goals to complete as many as you can.

Video Summary

1. Visit a strawberry festival

Summer is prime time for tasting strawberries. More often than not, an area that grows strawberries will have a strawberry festival. Indulge yourself in strawberry pies, jams, cakes and more!

2. Have a picnic

Take your partner or your family to the local park and enjoy a relaxing picnic. Designate each person to bring one food item of their choice to add to the fun.

3. Camp in your back yard

    The summer heat can sometimes make it hard to sleep. Why not enjoy the heat outside in the yard? Pitch a tent or gaze into the night sky.

    4. Take long walks

    Discover something new where you live. Take the afternoon off from your chores and go for a long walk. You may be surprised by what you discover.

    5. Break a world record

    Breaking a world record doesn’t have to be time-consuming. You could even break one on your lunch hour. Give it a go!

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    6. Go on a bike ride

    The number of bike paths on roads in big cities has increased dramatically over the years. Take advantage, and enjoy the summer breeze.

    7. Join a gym class

      The gym is not everyone’s idea of a good time, but why not go with a friend a join a class? Spinning, yoga and step classes are always more fun with friends, and a lot of gyms allow you to pay-as-you-go.

      8. Find a new hobby

      The summer is the perfect time to find a new hobby. Serotonin (our body’s natural “happy” hormone) is produced by the sunshine and will be at a yearly high, which is great for when we want to tackle something new.

      9. Join a sports team

      Not all sports teams are competitive and require huge amounts of your time. Join in the fun with like-minded people, get fit, stay healthy and make some friends along the way.

      10. Make a slip ‘n slide

        Gather your friends, some plastic sheeting, a hose, washing up liquid if desired, and make a huge slip ‘n slide just like these guys. Granted, yours won’t be as big, but you get the idea… it’s fun!

        11. Make a treasure hunt for your kids

        Today’s digital world sees our children more often than not playing inside than outside. Why not create a sense of adventure by making a treasure hunt? Only rule? It has to be outside.

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        12. Visit a free festival

        Towns and cities are awash with free festivals, with themes from film to science. Scout your local area and discover something new.

        13. Visit the zoo

          Let’s face it: we love animals. While browsing news websites and social media networks you’re bound to come across a few pictures of cats. Take a trip to your local zoo for a better experience.

          14. Take a road trip

          Enjoy the open road with a few friends and take a road trip somewhere–anywhere. Just go out and enjoy the sunshine!

          15. Play ultimate frisbee in the park

            Frisbee is always great fun down the park, but why not turn it into more of a competitive sport by playing ultimate frisbee?

            16. Make your own ice cream

            Ice cream is a very versatile dessert. Make a sandwich, enjoy a cone, or simply just enjoy a bowl full. Better yet, making your own ice cream allows you to create any flavor you want.

            17. Invite your neighbors over for a BBQ

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              When was the last time you invited your neighbors over? Do you even know them? Now’s your chance. Just ask each person to bring a food item so costs don’t mount up for you.

              18. Get a summer job

              For many students, summer is the time for relaxation and fun. But who said earning money and being productive isn’t fun? You only get out what you put into a situation.

              19. Attend a charity event

              Attending a charity event is a great way to raise funds and awareness for a cause, meet new people, and generally have a good time. Search for your local charity event today.

              20. Visit a national park

              National parks are a great way to explore nature and learn something new. You could even volunteer and make a difference in helping restore natural habitats.

              21. Visit your local comedy club

                Local comedy clubs are extremely underrated. They are cheap to attend and no doubt you’ll have a barrel of laughs.

                22. Make your own hammock

                  Hammocks are very relaxing, are perfect for summer afternoons and are surprisingly easy to make.

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                  23. Read in your new hammock

                  Now you have your very own hammock, the only thing left to do is enjoy it. Grab your favorite book and read to your heart’s content.

                  24. Watch a movie outside

                  Movies are great. Relaxing outside in the evening is great. Put them together and you’ve got a perfect combination. In D.C, Maryland and Virginia this summer, for example, you can enjoy a huge number of movies outside.

                  25. Take a hike

                    Hikes are a great way to keep fit and see more of Mother Nature. There are countless trails available for you to explore. Why not try some this summer?

                    26. Learn how to fly a kite

                    As a child, you probably had a kite and haven’t touched it since. Why not dust it off and attempt to fly it? It’s tricky, but well worth the challenge.

                    27. Work out at the park

                    American cities are full of parks with ample space for a work out session. No doubt you’ll be happier to work out in the sun rather than a crowded gym.

                    28. Take your dog to the beach

                      One of the many joys of owning a dog is taking him or her for long walks during the summertime. This joy is enhanced when visiting the beach, for both you and your dog.

                      29. Make a summer smoothie

                      Healthy, delicious and perfect for the summer. Not only that, there are countless recipes ready for you to try.

                      30. Attend a free yoga session at the beach

                      No experience needed and all skill levels are welcome. Take yourself and a buddy down to the beach and try some yoga. You’ve got nothing to lose!

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