You can end up in a debt trap for various reasons. Ignorance might lead some there, dissatisfaction others, a disadvantageous loan someone else, and a difficult life situation another. However, they all have one thing in common. It is necessary to face these problems head-on and resolve them. What are your options?
How do people get into debt? Just loans?
Using other people’s money is no problem today. On the contrary. Housing loans and consumer loans are more popular than ever before. Reputable banks and non-bank companies will not lend more money to people in a difficult life situation. Unfortunately, there are plenty of institutions in our country that lend money to basically anyone. They do not care whether the debtor will have the means to repay their debt. All you need is an ID card and to be 18 years old. They are not interested in anything else. You can compare reputable loans in our comparison tool for the most advantageous loans.
Tip: You can also read more about loans on the Žij Úspěšně website, where you can also compare loans.
Those less reputable companies do not care whether they offer money to fresh adults who are just getting a taste for flashing slot machines. Or to someone who simply needs that new designer handbag and expensive boots. Another person borrows repeatedly because it is common in their social circle. It will somehow work itself out. Of course, there are also people who need funds for truly important things. But they are in the minority. Here we are not talking about housing loans and mortgages, which make sense and are often worthwhile for the debtor.
How to repay debt when you already have it
Spending money, both your own and other people’s, is very easy. Repaying it is then a less pleasant matter. It is therefore necessary to sit down and think everything through properly.
1. Summary of income and expenses
In the first step, put together all your income and expenses. If you have multiple loans, get a clear picture of them. Write down columns on a piece of paper: “total loan”, “repaid”, “remaining to pay”, “monthly payment”, “annual interest”. In short, create an overview of all your loans in one place.
2. Decide what to do next
In the next point, decide how to get rid of the debt. Have you considered the options of loan refinancing and debt consolidation? Debt consolidation for indebted people is offered by every bank today. It could save you a lot of money and you will get a better overview of your debts. If refinancing is not right for you, it does not matter. What about adjusting the repayment schedule? Consider how you will pay off your debts and adjust individual payments accordingly. Below we offer you a few methods.
3. Think about money
Regardless of your debts, increase your financial literacy. Money is a great servant but a bad master. Put together your family budget and clearly determine what you will spend money on and when. You will certainly find many items that you can do without for a while. At least until your situation improves and stabilises slightly.
4. Admit the truth to yourself
Yes, you are in a bad situation. It is unpleasant, exhausting. But on the other hand, it is necessary to fight it. Accept this state, stop hanging your head and solve the problem as best as you can. In moments when you feel anxious, do not be afraid to talk to someone and discuss your feelings and worries.
5. Increase your income, reduce your expenses
Really think about what you spend your money on. Cut down on what is not vital. At least for some time. Cook food yourself. Write down a menu for the entire following week. Buy ingredients accordingly. It is better to go to the shop more often for a few items than to make an unnecessarily large purchase and throw part of it away. This way you will create a new habit that will be useful to you throughout your life.
Repair your clothes and learn to shop in second-hand shops. You can find original pieces there for a few crowns. Again, buy only those items of clothing that are actually missing from your wardrobe.
Find another job or a part-time job for a while. Although some may claim that there is no work, there is. And there is plenty of it. If you have trouble finding a job, dedicate your free time to further education. Read books and increase your value on the labour market.
What else can help you?
Try to avoid social networks. The illusion they create can bring you down. Furthermore, if you know you have a problem with spending money, avoid shops where your weakness shows. Also, do not watch adverts that are designed to convince you that you need the given product or service.
Methods to get rid of debts
There are several methods to repay all your debts.
Snowball method
In the snowball method, you pay off loans from the lowest to the highest. You repay all your debts with the minimum agreed payments. Any extra money you have is sent to one specific debt. With the snowball method, you first pay off the lowest debts and then gradually move to the higher ones. The pleasant, even blissful feeling you experience when repaying a loan is very motivating for you. And you want to keep paying. This is also the advantage of this method.
The disadvantage is that you do not have the interest calculated, and this may be less financially advantageous for you. Overall, you will pay more money than you would have to.
Avalanche method
Here, on the contrary, you repay debts according to the interest rate. First, you pay off the loan with the worst interest rate. You leave the one with the best for last. It may happen that with this procedure, paying off at least one loan will take a long time. That will not add much to your good feeling. However, with the avalanche method, you will save on interest. And sometimes these are quite large amounts.
If you want to get rid of your debts as soon as possible, increase your income and reduce your expenses as much as possible. Even if you feel that it is no longer possible to do more, it is. The sooner you start really addressing your situation, the sooner you will have peace of mind.
Do you have experience with debt? Did you manage to resolve this situation? Share your experiences in the comments below and support people who are currently going through this difficult time.
