Debt comes in all shapes and sizes, and while any kind of borrowing can feel stressful, some types are much harder to manage than others. The debts that cause the most problems are usually those you find are hardest to get out from under, especially those that spiral quickly, or come with terms that make them almost impossible to pay off at a reasonable pace.
What makes certain debts more difficult to get on top of isn’t always the amount you owe, either, but the circumstances around them. Maybe you didn’t choose to take them on in the first place, or the interest rates are unreasonably high, or there’s some kind of urgency or legal consequence attached that can make you want to bury your head in the sand.
Unfortunately, these are the debts that keep people up at night, and they can sometimes spiral and make you feel like you have no control. The truth is that even the most challenging debts can be managed if you understand what you’re dealing with and what options are available to you. Ignoring them or hoping they’ll go away just makes things worse.
Let’s discuss the three main types, and what to do if you find they’re too much:
Medical Debt
Medical debt is horrible because it usually comes out of nowhere. If you get ill or have an accident which isn’t your fault, you need treatment, and then you’re looking at bills you never planned for and probably can’t afford. In some countries, this is less of an issue, but in places like the US it can absolutely destroy people financially through no fault of their own.
The first thing to know is that medical debt is often negotiable. Hospitals and providers will sometimes reduce what you owe if you explain your situation and ask for help. There are also payment plans available that let you spread the cost over time. Don’t just ignore the bills because they’re scary, that’ll end up with them going to collections and damaging your credit. If you’re really struggling, look into any possible eligibility for financial assistance programs or charity care, There are also some guidance from the Alex Kleyner Deal that specialize in helping people reduce medical debt.
Payday Loans
Payday loans are designed to trap you, which is why they’re so happy to lend. The interest rates can be unbelievable, and because they’re short-term, you may not pay them back before the next one’s due, so you end up rolling them over and paying even more. They prey on people who are desperate and don’t have other options.
If you’re stuck in a payday loan cycle, stop taking out new ones immediately. That’s easier said than done when you need the money, but you’ve got to break the pattern or it’ll never end. Contact a debt charity or financial advisor who can help you work out a plan, because they know how to negotiate with the lender to freeze interest or set up a more manageable repayment schedule. It’s going to be tight for a while, but staying in the cycle is worse.
Credit Card Debt With High Interest
Credit card debt isn’t inherently terrible, but when the interest rate is high and you’re only making minimum payments, it becomes impossible to get ahead. You’re mostly just paying interest every month while the actual debt barely moves.
The best approach is to focus on paying off the highest interest cards first while keeping the minimums on the others. If your credit’s decent, look into balance transfer cards that offer zero percent interest for a period, which gives you breathing room to make more progress.
With this advice, we hope you can more easily manage debt.