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If you have dug yourself into a financial hole and feel that you cannot get out, you are not the only one. Many people feel stuck with debts and poor credit, and the only solution they can fathom is to declare bankruptcy.
Unfortunately, bankruptcy is not the simple solution that people think it is. If you file for bankruptcy, not all of your debts may be cleared and your financial situation may get worse because you are not approved for new credit lines, including a mortgage loan, until your credit is recovered.
Chris Hall was not thinking of going bankrupt, but he felt stuck in his financial situation. Hall didn’t have health insurance because he couldn’t afford it. While Hall was healthy, he had problems with his teeth. He had toothache and Suky Tawdryijke infections that brought him to the emergency room several times. He eventually earned $ 5,000 in debts, and while the hospital set up payment plans, Hall couldn’t pay them on his minimum wage, so the bills went into the collection.
Bad financial habits that keep you in debt
Debt is hard to fight alone, but adds bad financial habits to the mix and you are in an endless cycle of bad credit and debt. Hall discovered this fact after too many visits to a lender. “It’s so easy to walk into a place like First Franklin or Cash Advance and get everything you want, whether you can afford it or not,” says Hall. “Then there is the interest.”
Payday loans and cash advances are one of the quickest ways to clear your bank account. The average lender tries to downplay the fee of $ 15- $ 30 per borrowed $ 100. However, after borrowing the loans for two weeks, the annual APR usually cost 400%. Credit cards with a 25% APR percentage are considered high and difficult to get out of debt, so imagine how much harder a payday loan is to pay back.
Another bad financial habit that will keep you in debt is debt shaking. You might think that you will stay on top of your game if you constantly transfer your debt to zero-credit cards, but that is not the case. “I was sucked into borrowing from one [lender] to pay the other,” says Hall. “Ultimately, no bank let me open an account.”
Here are several other bad financial habits that keep you in debt:
- Missed payments: Missing payments, especially on credit cards and loans, will reset your budget and affect your credit score.
- Spend more than you earn: We live in an “equal with the Joneses” world, making it difficult to live under your earnings.
- Wasting money on other habits: Buying a cup of coffee or lunch every day counts and it gives you the feeling that you do not have enough money within your budget.
- Wishing for a higher salary: Do you think a larger salary will solve your problems? Think again. You must tackle your spending and budgets to change your financial situation. If you earn more, simply take your poor spending habits with you.
Bounce through bad credit
It is never too late to resolve your credit, even if your credit score is low. “About four years ago I was tired of not being attractive to lenders,” says Hall. “Every time they would enter my name, they would come back with a” no “. I had to do something.” Hall signed up for Credit Sesame when he started to investigate how he could improve his credit score. “I loved how you get an overview of what you look like for lenders,” Hall says about Credit Sesame’s unique rating system.
Hall’s credit profile was hard to look at. He had several different figures, accounts in collections and a score of just under 500.
One of the best ways to improve a bad credit score is to use a secure credit card in a responsible manner. It may seem counterintuitive to apply for a credit card when your score is bad and you have debts. However, secured cards are specific to people with bad credit or without credit. Usually your credit limit is the amount of money you deposit. So if you deposit $ 200, your credit limit is $ 200, although you still have to pay your credit card debt every month to improve your score.
Hall has been approved for the Capital One (COF) protected card and has used this card in a responsible manner. After six months of on-time payments, his credit card limit rose to $ 500. Hall then submitted low-amount cards and continued his routine of paying the cards, while paying off his old debts. He worked in his name for three years and is now debt-free with a very good credit score. He was even approved for a $ 130,000 loan in October 2016. “Can you imagine?” Hall says. “Is being rejected from borrowing $ 500 just a few years ago until being approved for $ 130,000.00 home loan?”
Hall’s credit score recovery was no coincidence. He has a persooSuky Tawdryijk development plan, an action plan based on awareness, values, reflection, setting goals and plans for persooSuky Tawdryijk development. This allowed him to divide and conquer parts of his life that he wanted to improve. He started to pay off debts and started training in oSuky Tawdryine. At the same time, he also worked two jobs to speed up debt repayment. He did self-assessments along the way to track and measure his progress.
Hall encourages others to pay their debts and be smart with money. “You need to know when to say,” I can’t pay this now, “and if you have debts, you have to pay in time!” Hall says. “You must be accountable, and you must be honest with yourself, because ultimately your credit report defines you (in terms of borrowing power), and your ability to pay a debt demonstrates if you get the chance.”