- Debt resolution without debt restructuring
- How much debt for the remediation
- 4-step plan
- Step-1: Prepare
- Step-2: Outside the budget box
- Step-3: Schedule expenses
- Step-4: Close the holes
- The conclusion
Debt resolution without debt restructuring
Read the step-by-step plan to pay off debts below. But first the frequently asked question: How much debt should you have for debt restructuring
How much debt should you have for debt restructuring
It's not about the size of the amount. It does concern the following 4 conditions:
- You are unable to pay the debt.
- You have already examined whether there are other options for paying off your debt.
- The debt has arisen unintentionally. So you accidentally ended up in this situation.
- You must comply with the Wsnp (Natural Persons Debt Restructuring Act). You are obliged to comply with these. In addition, you should do your best to get rid of your debts.
4 Steps for Debt Resolving Without Debt Restructuring
Are you going to take steps yourself to resolve debts without debt restructuring? Then take these 4 steps.
Step # 1) Prepare for the unexpected Big Bill
The first step in “ resolving debt without debt restructuring ” involves a one-time large expense that is a little too large to be paid with your monthly salary or by saving for a few months.
Many of these debts are investments in assets that will rise or fall over time. The most common example is the purchase of a house. Very few people can save enough money to buy their home outright or pay for their entire house with a few paychecks. We use a mortgage to pay for that house afterwards and enjoy our home ownership.
Another example is investment in education. Many people cannot afford to pay tuition fees, so we take out a loan. We then plan (or assume) that our future source of income will allow us to pay for education afterwards.
The insidious type of one-time large costs are the expense that is not an investment. The urgent, unexpected, unplanned bill ! Extreme medical bills, disability, company bankruptcy, a lawsuit judgment, or long-term unemployment. These bills can pressure a family to move out or file for bankruptcy. They will never be able to pay off the debt with their income.
One way to combat this danger is to set aside three to six months of your expenses in a special savings account. An emergency fund. Especially for these kinds of emergencies and unexpected costs. This money is sacred! Only for a family case. The emergency fund will save your family from potential tragedies and help you create a safe future. Can you do this? Then this is already your first victory in debt resolution without debt restructuring.
Action: Open a special savings account as an emergency fund
Set aside some money every month . By depositing some money in your own emergency fund you save money for unforeseen costs. But promise yourself that you will not buy useless things with the money from your fund.
Step # 2) Think outside the budget box
The next tip about debt resolution without debt restructuring is : Do n't worry about budgets . As soon as we have a debt problem, we immediately understand: We stop opening the accounts, we stop answering the phone. We try to make budgets, reduce our expenses, stop internet subscription, live at a minimum, everything to prevent the bleeding to death.
But sometimes overspending isn't the problem.
You just can't earn enough to pay for your life. I'm not talking about living an extravagant lifestyle, or even a 'fun' lifestyle. But the basic needs of life such as; housing, insurance, groceries, gas, clothing. This can be quite expensive, given your income. This is especially common in expensive residential locations.
The first step to dealing with this problem is to stop feeling guilty . You're not a bad person, spending irresponsibly. You are someone who must recognize that you need more income and want to earn more.
Instead of staying in your guilt, you start taking action. Action to generate more income. You may not need to do something radical. Maybe you should just do what you're already doing. Or look for the hidden treasures in your life.
Make a proposal for your boss and describe how the company would be better if you got a raise. Create a new information product to generate passive income for your business. Search your attic for items you put up for sale on Marktplaats. Increase your knowledge to have a new chance on the labor market. Or you learn the things to save money. For example; you will learn how to carry out simple repairs at home yourself. This again saves you the costs of a repairer.
Whatever you do, the main idea is to start today . In other words, take immediate action!
Action: Brainstorm 5 ways to earn more income
That can be; ask for a salary increase, look for a new job, start a small business, sell a new product, sell your old stuff on Marktplaats, rent a room, learn a skill, etc.
Step # 3) Plan for the big expenses
This step is about debts that creep in unnoticed . You pay your bills and expenses every month. But what happens if the car breaks down? The property tax arrives? Has your salary already been received? Christmas? Baby coming? Mandatory boring birthdays? The big family vacation is coming ..
Can you pay for all of this with your salary or does it all go through the credit card ?
Auto repair, bicycle repair, gifts, taxes and travel. These are all examples of expenses that are not monthly but can be expected . We know they are coming, but not when or how much. These expenses cannot be on a credit card. You have to save in advance.
View your bills, expenses and income for the last year . Then calculate what you spend on average per year on all these things. If you do not have this information, make a realistic estimate. Divide that annual amount by 12. The result is the amount you should set aside each month for your irregular expenses.
Action: Open a special savings account for at least one unusual expense
For example for taxes, travel or gifts. Set aside a fixed amount each month. And only use this special savings account for what you set it up for.
Step # 4) Close the holes
Step four is about how to prevent your family from getting into debt . This by planning your expenses in advance, among other things. And with this step we come to the most insidious problem and also the most difficult.
Do you know where your money goes every month? How much do you spend on new phones or new subscriptions? Clothes? Personal care? Recreation? Movies? Netflix? Toys (both for the children and for yourself)? Do you really know?
Are you spending your money in accordance with your values and priorities? Do you spend more money on certain things? Not because you necessarily need it, but simply because your boyfriend or girlfriend has it too. Or that you like it yourself.
Usually we see that expenses are easily spent on clothing, toys, leisure activities, high-tech gadgets and other things. It seems like a small expense, but if you do this more often and add it together, you will end up with a nice amount. These are expenses where you quickly spend without thinking. And in this way, the expenses can even exceed what's coming in monthly.
Instead of staying in your guilt, do something about it ! Look at your habits over the past few months and choose the most obvious problem area. Are you buying it because you are stressed or out of boredom or unhappy. Do you buy CDs? Do you often shop online? Do you have to buy those extra shoes if necessary? Start in one category. Create good habits and rules for yourself in that area. Then expand the personal rules over the rest of your expenses.
Action: Create a cash department for your problem category
Put the (monthly) amount you want to spend in an envelope. Buy the nice things you want to buy. If the envelope is empty, it is done! Are you short of money for what you want to buy? Then don't supplement it with your other budgets. Instead, you keep the money in the envelope and replenish it the following month with the amount according to your budget.
Conclusion resolving debts without debt restructuring
You can see that it is quite possible to stay out of debt restructuring . It does require a certain degree of discipline . Don't stand still or think about your problems. But take action . Be an entrepreneur. Only then will you see results. And above all continue to maintain the good things you are doing. Solving debts without debt rescheduling is then a lot easier.
If you have some nice tips, let us know. Then we will all share it here on lakes-n-trails.com.
More tips? Read here how to live cheaper.