In today’s uncertain times, more and more people are struggling with serious financial problems. That’s why they are trying to heal a rotten home budget in many different ways. They draw a large amount of loans and credits, but over time, they can no longer pay off their debts. This is a short definition of what a spiral of debt is. What can you do to avoid its fatal results?
Above all, it is worth noting that only those who have small incomes are struggling with this problem. These people have large amounts of money, but they do not allow to satisfy all consumer needs. These, unnaturally grown, generate further, pyramidally rising costs. Then the borrower pays part of the funds to repay debts, and the next invests in the next, often unnecessary, expenses. All obligations combine into one, requiring large amounts of money. Finally, it turns out that it is difficult to pay such a high amount. That is why it is important that every consumer is known for verification in debtors’ databases. Let’s go over what to do to prevent horrendously large debts. What practices should be implemented? How to avoid the spiral of debt?
The spiral of debt may have serious consequences for our budget. Therefore, it is worth answering the question of how to avoid the spiral of debt? Above all, it is important to run a strictly defined home budget. This mainly involves writing down all income and expenses. Then you can clearly see what shopping you can afford. It is also possible to think about the way in which the money you earn is spent. In the first instance, we should pay the fees after the deadline or those that are approaching the end of the repayment period. Thanks to this, we will avoid increasing interest and other costs related to the delay.
The priority may be fees affecting the quality of our lives, for example: rent for an apartment, fees for gas, water and electricity, and then the remaining amount should be distributed proportionally to arrears in financial institutions. However, please note that if we have enough money to repay at least one commitment in full, we should do it in exchange for small payments to the account of several debts. In this way, we will get rid of at least one commitment in its entirety. Let’s remember not to incur further financial obligations! It is good to think about which goods are necessary and which are unnecessary. After all, you can decide to give up expensive entertainment or exquisite food. Then, some additional resources are gained to satisfy all basic needs. You do not need to worry about the lack of cash, because all current, most important expenses.
Life can be unpredictable and surprising. Nobody predicts that he will lose his job or become seriously ill day by day. Then the most common thing is that people make drastic decisions. However, you can do something to make the spiral of debt not a problem. For this to be achieved, it is necessary to set aside a certain amount of money. It is known that this process is long-term, but it is worth taking the effort to implement it. The funds deposited in this way will satisfy all needs if there is no possibility of obtaining money. For assistance in this area, you can ask a financial advisor who will suggest a suitable solution.
It is worth setting a goal for which we collect certain sums of money. The reason for collecting funds can take many forms. Some put aside for a dream car, others for holidays abroad or other goods that they always thought of. Such a buffer will be useful even when this designated trip or purchase will have to give way to another, definitely more important purchase.
First of all, you should stop the activities that increase debt to loan companies. One should realize that incurring further financial commitments does not lead to the elimination of the problem, but rather increases its scale. That is why you have to learn to spend only the amount that satisfies your own needs and the largest lender. It is towards him that we have the most urgent duties. That is why he should first receive what is due to him in the light of the signed contract. You can also apply for extending the loan in other companies for which we have a debt. You will get valuable time. It is also important to think about obtaining an additional source of income. Occasional work makes it easier to deal with financial problems.
The spiral of debt is not so terrible when we apply the 33 percent rule. What is that?
Avoiding the spiral of debt is not as difficult as it may seem. However, it requires great caution and restraint. Then you do not make the most common mistakes. At the same time, it is possible to manage the finances sensibly.
It is a certain indicator that allows you to set financial limits in which you can navigate without having to worry about the financial situation. The point is that the total amount of liabilities would not be more than 1/3 of the monthly net income. It is important to remember that the amounts that contribute to our account every month allow you to pay for everything that matters most. We must, with their help, pay for the flat, food, car, but also repay the loan. Thus, earning a total of PLN 3,000 net, we can not afford to pay more than PLN 1,000 a month. If we introduce these tips into our lives, we may be able to avoid the spiral of debt and we will get a guarantee of peace for the home budget.
It is worth remembering that the lender has the right to terminate the loan agreement to the customer who fails to pay the debt. Detailed information on this topic can be found in the documents we have signed. However, often the termination is made when we are late in paying the payment for 31 days. In this case, we have an obligation to repay the debt during the notice period. Most often it is 30 days. Despite this, we must necessarily check this information in the contract, because it may vary depending on the company. If we do not make repayment on time, a procedure for recovering money is initiated. It is important not to attempt to apply for another lender. If we do, at this point it is too late to seek answers, how to avoid the spiral of debt, because we have already fallen into it.
We will incur costs related to the prompts, interest and debt collection activities that the external company deals with. If these activities do not bring the desired effect, the lender has the right to go to court. In this situation, we should not avoid contact with the bailiff, because it threatens to seize the bailiff. If we cooperate with it, it is usually possible to negotiate the amount of the monthly debt repayment in such a way as to adjust it to your financial situation.
Bailiffs take action when the debtor does not cooperate with the bailiff and avoids contact. In this situation, the bailiff has the right to take our salary and property. All this happens on the basis of the enforcement order issued. However, does this mean that we will be destitute? No. The bailiff is obliged to leave the debtor the equivalent of the minimum wage, which in 2019 is PLN 2250 gross, or about PLN 1634 “on hand”. In this situation, the salary of persons receiving the lowest national income is not subject to seizure by the bailiff. The remaining debtors are subject to a limit of up to 50% of the remuneration received. It means that it will be introduced only in the case of a salary higher than approximately PLN 3,268 “on hand”.
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