Dealing with Debt while Unemployed

Dealing with debt is hard when the bills keep coming, even though your paycheck doesn’t. Emotionally, allow yourself a few days to adjust to your new jobless status. The economics of unemployment are hard to separate from the emotional fallout, so take some time to realize that it’s not you; it’s the economy.

Losing your job is a temporary setback. The difference between those who survive and those who don’t is that those who quickly take control of their debt will automatically feel like they are in control of a situation that, otherwise, renders you powerless.

Unemployed and in debtStep 1: Filing for unemployment benefits

If you are eligible for unemployment, file immediately. Most states offer online registration, which eliminates a trip to the local office of employment and streamlines your weekly benefit filing routine. It also saves on gas which is one of several places you will need to be cutting back on expenditures to reduce your daily debt.

Step 2: Do the math

Gather up all your current bills and get out a notebook. Separate your bills into piles rent, utilities, credit cards, loan payments, and insurance premiums. Calculate the number of your monthly expenses then break that down into the amount of money you need weekly just to cover your living expenses.

Now, consider your assets how much you have available in savings and checking accounts, as well as Christmas or vacation club accounts. If you haven’t yet tried online banking, this might be an ideal time to set up a free bill pay account with your current bank. It’s an efficient way to track your monthly payments and schedule bills to be paid on time, thus avoiding late payments – which is a common but completely avoidable waste of money. It also saves on money you would otherwise be spending on postage and envelopes and reduces paper waste. Depending on the urgency of your financial situation, you might consider speaking with a financial advisor about the pros and cons of tapping your 401K. The biggest drawback here is that you will pay the penalty for early withdrawals. However, if it makes the difference between losing your home or car, it might make sense in the long run.

Step 3: Tighten your belt

Remember that the easiest place to cut back on your budget is food shopping and household goods. No matter how thrifty you think you are, there are countless ways to slash your weekly grocery spending even more. Clip coupons, switch to store brands, buy in bulk (but make sure you check the unit price on the shelf.

Reducing Credit Card Debt to Become Manageable

Anyone who’s ever had a big credit card bill knows how disheartening it can be to pay on it each month and not see the balance disappear. It can feel like the debt is never-ending. There are ways out, though, if two things are recognized:

  • There is a legitimate problem with the level of credit card debt, and
  • There is something that really can be done about it.

If both of these things are understood, it takes the limits off of a person and lets him move toward improving his financial health.

Do not be drowned in credit card debtProblems with Credit Card Debt Reduction

There are many different ways people can reduce their debt, but they have to be committed to it and willing to work to solve the problem. One of the main areas of debt for a lot of people today is credit cards, and many people are interested in a way to reduce that debt quickly. This is often because it seems, even though payments are constantly being made on the credit cards, the balance does not go down by more than a few dollars each month.

To reduce credit card debt quickly, however, much more than the minimum payment has to be made. Most people don’t realize this or don’t want to acknowledge what it means for them. The ones who do understand what they need to do don’t always think they have the money to change their circumstances.

There are always options, though, even for people who feel they have no chance to change their circumstances and reduce their credit card debt quickly. When people are involved with too much credit card debt, they have trouble meeting their other financial obligations as well, and due to this, they can struggle with depression, anxiety, and other difficulties.

Ways To Reduce Credit Card Debt Quickly

There are various ways people can reduce credit card debt quickly. It’s unfortunate that not many people are interested in doing so, or that they don’t feel like they have the means to do it. If more people were aware of what they could do to reduce credit card debt faster than they expected, they would be much more likely to work toward that goal.

In addition to paying larger amounts on the credit cards and finding cards with lower rates, there are other ways to reduce charge card debt quickly. One of those ways to reduce credit card debt in a short period is to refinance a home and use the equity created from that to pay off other debt, such as credit cards.

However, there are a lot of significant problems that can come about from home refinance, as well, so it’s important to be very clear about what’s being done and the amount of money being spent. Paying off the credit cards with equity and then using the credit cards again will only dig the person in deeper where debt’s concerned.

As with any debt reduction strategy, there are good and bad points to paying extra, getting cards with lower rates, and doing things like refinancing a home or taking out a personal loan to pay down debt. Consider the situation carefully to make the best choice, and see a credit counselor to help if necessary. There are also many online tools that can help with debt reduction planning.

Pros and Cons of Credit Union Personal Loans

Babbitt CU is designed to help steelworkers take control of their personal finances. Members can save money or borrow money when the need arises. In general, credit unions are formed by a common bond, such as a shared interest, employer or locality. They work purely for the interests of their members and not for financial gain.

Steelworkers need financial support in case of emergenciesBenefits of Credit Union Personal Loans?

  • Non-profit organizations. Credit unions don’t have any shareholders. They are non-profit organizations that work exclusively for the benefit of their members. This also means that, unlike banks, no pushy salespeople are trying to get individuals to buy things that aren’t in their best interests;
  • Attractive APR. Credit union personal loans charge those wishing to borrow money the equivalent of 2% or $2 per month. They present an affordable alternative to both pawnbroker loans that charge about $8 per $100 borrowed or payday loans that charge $20 per $100 borrowed;
  • Affordable borrowing. Members wishing to take out a personal loan from a credit union will need to prove that monthly repayments are affordable. This involves producing a budgetary statement and proving affordability;
  • No penalties. It is possible to repay a credit union personal loan at any time without accruing costly penalties. This serves to help reduce the amount of interest paid;
  • Debt counseling. Taking out any form of personal loan can lead to money problems. Almost all credit unions have a source of debt counseling on-hand to help members that are struggling to keep up with monthly repayments.

Negatives of Credit Union Personal Loans?

  • Low amounts. Credit union personal loans are only available for modest measures to help with short-term money problems. Should someone need a personal loan for home improvements, it will still be necessary to approach a bank;
  • Money problems. Not being able to make the monthly repayments on a credit union personal loan can feel a lot worse than owing money to a bank because it is a non-profit organization. This can lead to additional worry and sleepless nights for members;
  • High APR. An individual with a good credit rating can secure a lower rate of APR and more affordable monthly repayments with a personal loan from a bank. However, smaller loans tend to attract a higher APR and don’t offer the flexibility of credit union personal loans.

Individuals that wish to identify a local credit union should approach their Citizens Advice Bureau (CAB). Although loans offered by credit unions are small, they charge a lower rate of APR than payday and pawnbroker loans. This ensures that monthly repayments are lower meaning fewer money problems for their members.