Financial challenges aren’t uncommon for most people. At some point in their life, they may struggle with compiling debt or late payment fees. However, many of these challenges don’t have to occur if the right habits are developed. It would also save you money and stress if you could foresee these challenges and take your finances on a healthier path instead. Having the right knowledge about your finances could put you steps ahead, especially if you use the knowledge in the right way.
Here are seven preventable financial challenges that you should aim to avoid.
Bankruptcy
Although going bankrupt isn’t the end of the works, it is definitely avoidable. For the sake of clarity, bankruptcy is a legal process in which people who can’t repay their debts to creditors seek relief for the debt. It often signifies a fresh start, but it can have negative implications such as the negative bankruptcy information remaining on your credit report for the next ten years.
Having said that, bankruptcy typically happens as a result of various challenges. Some of the top ones are medical expenses, divorce, and unexpected expenses. To prevent this, try and tackle your financial challenges as soon as they arise as opposed to waiting for them to worsen.
Late Payment Fees
Paying your bills late is another common occurrence that triggers financial challenges. This is easily preventable if you’re ready to get organized and use the many tools that are available to you. Late payments aren’t usually intentional, so make the extra effort to ensure you don’t forget. In this day and age, automation is common and it guarantees that you won’t forget to pay.
Aside from automation, you could try using your calendar to set alarm reminders on or before the day. Prism is a clever app to download, as it will sync your account balances and bills and send notifications to remind you to schedule payments. To avoid a late payment fee altogether, you could call the company as soon as it happens and plead for forgiveness.
Foreclosure
For those who are home owners, a foreclosure is something that could happen when you default on one too many payments. You may end up falling behind on payments due to credit card debt, illness, or sudden unemployment. Whatever the case may be, a foreclosure can hit hard on your finances and eventually lead to you losing your home.
To prevent a foreclosure, contact your lender as soon as you realize you have a problem. Also, be sure to properly understand your mortgage rights – typically found in your loan documents. Knowing the foreclosure laws and timeframes in your state could also give you more options if you’re ever in this predicament.
Also, make a note that you can have a foreclosure removed from your credit report by getting the right legal help. Crediful has financial advice that could definitely point you in the right direction.
High-Interest
When you take out any type of high-interest loan, you’re putting yourself in harm’s way financially. This is because high-interest loans can cripple you financially, especially when you don’t repay what you borrow in full. When you pay the minimum balance, you’re going to find that the interest keeps piling on and you’re acquiring debt that’s difficult to pay.
In order to secure low-interest loans, you’ve usually got to have relatively good credit. Alternatives to high-interest loans are personal loans from a bank whose interest rates usually fare better than payday loans or credit cards. Person to person loans are also a good alternative, especially if you don’t have great credit or consistent income. Lastly, you can do informal loans if you’re able to find a friend or family member to help you out, but always be sure to get everything in writing.
Low Income
Not having enough money is an easy way to find yourself in debt. If after budgeting and cutting down expenses, you still find that your outgoings are more than your income, then the only solution is to increase your income. This can seem impossible when you’re working long hours and don’t have the energy for it, but it’s about looking for ways to work smarter. To boost your income, you could try taking a part-time job on weekends or your free days too.
Medical Expenses
You can’t control when or how you’re going to fall ill. It can result in expensive bills that you haven’t planned for which eventually lead to debt. As a way of keeping this from happening, verify that what you’re owing isn’t covered by insurance.
Also, see if there’s a way to negotiate payments if they’re more than you can handle. A last resort would be to see if you qualify for medical aid or raising the funds online as there are people who would be willing to help.
