In a debt hole and can’t get out? Here’s how to do it

Ever been out with friends and felt like treating everyone, so you pull out your credit card? It’s a nice gesture, but don’t do it if you can’t pay it back. Ever woken up with a hangover to messages from your bank billing you for things you can’t remember? Ever gone to a sale and overspent on your credit card because everything was so cheap? Well, the things you bought at an unbelievable deal will turn out to be more costly than you thought. Credit cards are basically money you don’t have. And it’s money you have to return.

How to get out of the debt hole

If you are in financial debt, accept the problem and seek help. It’s not a weakness. It’s fixable. Remember that you can get back to a debt-free life.

• Check your credit card status and balance to know how much you owe.
• Negotiate with your bank about your financial situation and see if you can come up with ways to pay back your loan with less stress.
• Contact professionals like debt doctors that will provide you with guidance and solutions. They will help you manage your debt.
• Find ways to release stress without spending money.
• Check out personal loans with a fixed rate of interest that can be paid back in equal instalments. You can use this as a last resort to clear your piling credit card debt. If you decide to use a debt to clear another debt, weigh out the pros and cons and check if the cost of the loan would be worth it.
• Look at credit card balance transfer You may be able to switch your credit card debt to another bank that offers a lower rate of interest.

DIY debt solutions

In times of financial crises, it is up to you to recognise the problem. Many people simply feel they can’t seek help because they would lose face or respect or their spouse might leave them, whatever be the reason! Or you may think your debt may not be severe, and you can solve the problem yourself. Here are a few tips you could use to clear your debt instead of going into a depression.

• Don’t accumulate any more debt. Drill it into your mind that the credit card does not exist.
• Try to put away whatever you can to clear your bills.
• Cut back on luxuries. Are you spending money on the gym or yoga classes? Give them up just for a while, till you can save that money to pay back your debt.
• Cut back on going out to expensive dinners and clubs.
• Don’t shop for a while. Keep your shopping to a minimal for just your basic needs.
• Sell household items you’re not using to raise money.
• If you have things that are sentimental but could fetch you a sizeable sum of money, try to break the bond and get yourself to a better life.

The dos and don’ts of credit cards

If you own a credit card or are applying for one, here are some golden rules to keep you out of debt, and in turn, out of depression.

Dont's

• Don’t spend more than you can pay back.
• Don’t buy things you can’t afford. Don’t swipe your card for stuff you really don’t need.
• Don’t use your credit card when you’re feeling blue.
• Don’t get caught up with other people’s lifestyles that are out of your reach.
• Don’t carry your credit card when there’s alcohol around.
• Don’t take on multiple cards which you cannot handle.
• Don’t get into the habit of paying just the minimum due.
• Don’t buy things for other people with the promise of them paying it back. There’s a good chance you’ll be stuck with the bill.
• Don’t swipe your credit card because you’re getting a discount if you can’t pay it back immediately and in full.

Do's

• Use your credit card wisely. Make smart moves and smart purchases.
• Buy things you really need. Try to live within your means.
• Make sure you have enough money coming in to pay it back.
• Take on only so much debt that you can handle.
• Pay your credit card bills on time.
• Try to pay your bills in full and avoid interest.
• Buy big money items on EMI, so you have a set amount every month.
• If you are going to buy something for someone, make sure you can afford it. Think of it as a gift. If the money comes back, well and good.
• Always check your credit card statement every month to make sure you know how much you’ve spent, make sure all purchases are legitimate and not fraudulent, and also to know what you need to pay

In all seriousness though...

Debt can no doubt make you feel blue. But new studies show that credit cards can lead to depression. Depression is not a sign of weakness, rather an illness. It can be fatal if it’s not treated. Millions of people around the world face depression at some point or the other. But carrying the weight of a credit card, home loan EMIs, and so on, can increase your risk of depression if you fail to use them wisely.

The University of Wisconsin – Madison has found that short-term household debt is a common stressor that can trigger depression. Long-term and mid-term debt such as loans against collateral has not shown any strong link to depression. Although if you have both long-term and short-term debt resulting in it being severe and cumbersome, then your chances of slipping into depression are raised. According to the study, the people most affected are:

• The unmarried
• The retired/retiring
• The less educated

Depression and debt are a vicious cycle. Depression could also lead to financial debt if the victim uses shopping as a relief or an escape. If you are depressed, recognise the signs and seek help before it takes over your life.

Remember that debt is a temporary problem. You can make your life better and be free from it. Credit cards can help you or distress you. Credit cards have a number of benefits to offer. Knowing how to use a credit card smartly can make all the difference in your life.

This is a partnered post.