Thousands of Maryland residents face mounting or out-of-control debt every year. This is partly due to the expenses required to develop a career, such as higher education and a vehicle for commutes, which may require going into debt.
What might start as a modest debt can gradually spiral into a monster eating up more of your income than you can afford. You may find yourself missing payments and damaging your credit score, or contemplating bankruptcy.
Getting out of a debt spiral isn’t easy, but it can be accomplished with discipline and a good plan.
Reckoning with a debt spiral
The first step to escaping a debt spiral is to make a thorough accounting of your debt and income. This means figuring out the total balances, interest rates, minimum monthly payments, and other relevant factors. Only once you fully understand your situation can you begin to remedy it.
Once you know how much you need to pay, it’s time to create a monthly budget. When making a budget, your first goal is to balance the books, and your eventual goal will be to create a small monthly surplus. That surplus can go toward savings or paying down debt ahead of schedule.
Sometimes, a scrupulous budget can break the debt spiral, but other times more drastic methods are needed. In such cases, bankruptcy may be the best way to manage your situation
Going the extra mile
Lifestyle changes can be vital when breaking a debt spiral. Choices like downsizing a home, apartment or car can make a massive difference. As can breaking the habit of spending with a credit card, using debit or cash instead.
Even that may not be enough, and you may want to consider either a debt relief company or declaring bankruptcy. Either of those options, when done correctly, can turn even the most desperate situation around.
Escaping a debt spiral may be difficult and frustrating. However, you may still have several options for addressing your situation.