- 1 Veterans: Losing Your Job While Still Owing Credit Card Companies is BRUTAL!
Veterans: Losing Your Job While Still Owing Credit Card Companies is BRUTAL!
Are you a veteran who has been fired from your job while owing a huge debt?
This situation can seem like someone is adding a fresh layer of salt to an open wound. This is a situation in which a person might want to explore a guide to how to repair my credit myself.
How in the world is anyone supposed to get clear of their debt in this situation?
Well, we have some strategies that may help someone in this situation not just cope, but thrive! Read on to find out more…
Prioritizing Your Debts While Unemployed
When you’re unemployed, you may feel like you are drowning in bills and credit card debt. Having little income makes it hard to think of options to get out of debt.
The good news is that it’s not impossible to pay off your debt while unemployed. Unemployment benefits don’t pay forever, so you should still be proactive in finding a job or in hustle mode.
If you are in-between jobs there are several things you do that will still allow you to pay your obligations. Of course, there are many sacrifices that will have to be made.
Debt in our society will never go away as long as we are governed by capitalism. It is important to make paying off debt a priority to prevent an even bigger financial hardship in the future.
Not all credit card companies or lenders will allow you to defer or postpone payments, especially if you hadn’t arranged some type of insurance with them beforehand.
If you stop paying all together, your credit score will tank making it difficult to obtain credit in the future.
Prioritize Your Debts In A Logical Manner
Start by making a list of all of your debts and their interest rates. Call each one and see if any will allow deferment so you can postpone payments for a short period of time.
The ones that don’t, focus on paying down the credit cards with the highest interest rates first.
Keep your spouse in the loop, once they see you’re making headway, they may become motivated to help you keep up the good work.
Plan to Live Frugally As Possible
If you go minimalist and learn to survive on just the basic necessities, you can use any extra money you come across to pay down more debt. Start clipping coupons for groceries and minimize your use of gas and electricity.
If you continue to do so, over time you will start to make a habit of saving instead of spending money.
Get into the mindset to get out of the habit of using credit cards if at all possible. If you don’t have the money in your checking account for that thing you want but clearly don’t need, don’t buy it.
If you want to go on short vacation, save for it instead of putting it on a credit card.
Consider a Debt Consolidation Loan
A debt consolidation loan allows you to pay off your debts with a new loan and new terms. However, we generally do not recommend exchanging debt for debt because the real problem is usually not addressed.
This just allows one to paper over the fact that they have no control over their spending.
However, if you get fired, all bets are off and it’s all hands on deck to keep the ship from sinking!
In particular, this route may be a good idea if you have credit cards with extremely high interest rates. The higher the interest rate, the more pressure it will put on you to pay off the debt.
A debt consolidation loan may get you a lower interest rate to save you money over time.
High interest rates also lead to high minimum payments. If you are unemployed, this can make it difficult to keep up. If you are overwhelmed because you have too many bills, debt consolidation will help you out with that.
All of your bills are reduced to one, making it easier to make your payments again. If you go through a debt consolidation company, they will give you a loan equal to the total amount of debt you owe.
You will then make your monthly payment directly to the consolidation company. If they can offer you a low interest rate, this could be a good option for you.
WARNING: There are some risks involved when going through a debt consolidation company. Your repayment plan may be much longer causing you to pay more interest over the life of the loan. If you make a late or missed payment, you could face high penalties and your interest rate could go up. It is also likely that you will completely tank your credit score immediately.
So is debt consolidation a good idea? Generally, we feel the answer is no. However, with all of the information out there to consider, you should do your research and speak with a professional.
Everyone has a different financial situation and this may or may not be the best route for you.
A professional can guide you through the process and better explain how it will work for your financial situation.
What Happens After Paying Off All Your Debts
Paying off debt while unemployed can be extremely difficult. However, it will teach you a lot of lessons along the way. Drowning in debt can lead to depression, illness and a multitude of health problems.
Once you have paid off most or all of your debts, your life will change. You will have the freedom you hadn’t experienced in a while and will now have the ability to pursue what you want with freedom.
Less monthly bills require less income therefore, you may be able to take some more time off or find a less stressful job. If you do go back to your regular job, you can use the extra monthly income to save for luxury’s and vacations.
Continue to Be Credit Card Responsible
Once you are out of debt, you can continue to use your credit cards responsibly. Using a credit card and paying it off in full before the next month will positively impact your credit score.
Start with one or two low interest cards and use them for gas or groceries. It is important to remember to pay the balance in full before the next billing cycle.