What NOT to Do to Get Out of Debt!
Being in debt can be scary. You may feel like you’re not in control and unsure of how to get back on the right track.
When in debt, it can become tempting to do some pretty irrational or desperate things for money. There are many ways to earn some quick cash, but they come at a cost. If you have debt that has become unmanageable, then you might want to make yourself aware of what not to do and why!
1. Gamble What Little You Have
Sure, you might win big, but the odds aren’t always in your favor. If you put the extra money you have towards a lottery ticket or a quick game of poker instead of your savings, then you may lead yourself into bad debt. Consider using this money wisely – $20 a month can go a long way.
2. Do Something Illegal
This one should go without saying, but for some people, desperate times call for desperate measures. Some illegal activities, like theft, insurance fraud or selling drugs, can seem like an easy way to earn some quick cash and get yourself out of debt – until you’re caught! Be responsible. If you find yourself leaning towards illegal activities to get extra money, then you may want to consider talking with someone or even a debt attorney to help you get yourself on the right track again financially.
3. Cash in on Your Body
There’s nothing wrong with donating a kidney, sperm, or even becoming a surrogate. These can all boost your cash flow and also be very rewarding! However, they also come with consequences and responsibilities that should be carefully considered first. Consider all options before making any big decision that can affect your future.
4. Pawn Off Your Valuables
Pawn shop loans can give you access to quick cash, but if you fail to repay them promptly, they’ll sell off the items you’ve loaned them. Pretty soon you’ll find yourself still in debt and without your valuable family heirlooms.
5. Borrow from Your Retirement
You have a right to cash out some (or all) of your retirement account, but you should be aware of the consequences that come with that. Not only may you be penalized if you take the money before a certain age, but you will pay taxes on the withdrawal, you will miss out on growth potential of the withdrawn funds, and you may jeopardize your ability to retire at your desired age or enjoy the kind of lifestyle you want during retirement. Consider speaking to a financial advisor first before tapping into your retirement to help pay off your debt.
6. Take Advantage of Questionable Offers
As a general rule of thumb, when it comes to your finances, if something seems too good to be true, then it may be. Responding to emails saying you’ve inherited a large sum of money are a good way to become a victim of identity theft and find yourself with even more debt. Any mail or email you receive from companies offering debt consolidation or pre-approved credit cards should be carefully scrutinized. The devil is in the details with these types of things and often you’ll find that these types of offers won’t actually save you any money.
7. Stay in Denial
They say ignorance is bliss, but that’s not the case when it comes to your finances. Tossing your credit card statements in the trash and ignoring calls from creditors can only get you by for so long. Eventually bad financial habits will catch up to you, and you don’t want to leave yourself wishing you’d confronted your finances sooner!
So, what should you do if you find yourself in over your head in debt? There’s no quick fix, but with some dedication and patience, you can get back on track the right way. Start by assessing your financial situation. Gather all your loan documentation, account and credit card statements, and any retirement savings you have. List out your debts and make a plan and budget to start paying them off – and stick to it! There are many books and online resources to help you along the way. If you feel like you need a little extra help, consider talking with a financial planner or an attorney that specializes in debt resolution. They can help you understand your options, prioritize your expenses, and plan for the future.
Have you ever been tempted to do something a little out of the ordinary to get out of debt? Share your experiences below.