Debt is money that you owe. Whether you took out a loan, used a credit card, or got behind on a bill payment, it’s debt. When debt feels like a barrier to your goals it can be hard to face, but it’s important to remember that with a little planning, you can reverse your situation.
One simple way to address your debt is to create a budget.
- First gather your bills and receipts to see how much you typically spend on things like groceries, entertainment, transportation, clothing, and everyday expenses.
- Then add up all your paychecks and any other income. Subtract your expenses from your total income.
- Look for expenses that you can reduce each month so that you can have more money left over.
- When you are done, make a budget and try to stick with it.
Has your debt already gone to a debt collector?
Talk to the collector at least once, even if you don’t think you owe the debt or cannot repay it immediately. By doing so, you can confirm whether it’s really your debt and find out more information. Additionally, a collector cannot:
- Contact you before 8 AM or after 9 PM., unless you agree to it
- Contact you at work if the collector is told you’re not allowed to get calls there
- Tell anyone about your debt
- Harass or lie to you
Are you having trouble paying your mortgage?
Contact your lender immediately. It’s best not to wait because a lender could foreclose on your house. Most lenders will work with you if they believe you’re acting in good faith and your situation is temporary. Your lender may be willing to lower or suspend your payments for a short time or even extend your repayment period to reduce your monthly payments. Before you agree to a plan, find out about any extra fees or other consequences.
Are you having trouble paying your car debt?
If you know you’re going to default, you might be better off selling the car yourself and paying off the debt. You’ll avoid the costs of repossession and a negative entry on your credit report.
Are you having trouble paying your student loan?
If you have federal loans, the Department of Education has different programs that could help. Applying for these programs is free. You can find out more about your options, and how to get out of default, by going to the US Department of Education’s Studentaid.org or by contacting your federal student loan servicer.
When debt feels like a barrier to your goals, it’s important to remember that these tools can help you take the first step. If you still feel stuck, contact your local Extension office and ask to speak with a Financial Wellness Educator.