NEW YORK, March 3, 2023 (Newswire.com) - iQuanti: Despite the best intentions to properly manage our finances, our efforts sometimes get derailed by unplanned bills and mounting debt. Fortunately, there are options when it comes to addressing money problems, like taking out a personal loan or borrowing from loved ones. In this post, we'll give you five strategies you can consider using to help you get out of financial trouble and back on the right track.
1. Take out a personal loan
If your money issues are due to an unexpected expense like a large medical bill or home repair, consider taking out a personal loan.
Personal loans are commonly used for a variety of purposes, including the financing of major purchases, or paying off high-interest debt. In most cases, this will be a better option than putting the expense on a credit card because a personal loan can often have a lower interest rate for a qualified applicant.
A personal loan can often be a secured loan. This means that something of value like your home or vehicle must be pledged as collateral to secure the financing. Keep in mind that defaulting on a secured loan could lead to forfeiture of the asset.
2. Leverage the equity of your home
If you've owned your home for several years, you might be able to use the equity you've built to help you get the funding you need with a home equity loan.
Equity refers to the value of the home that you, as the homeowner, would be entitled to if it were sold. For instance, someone who owes $100,000 on a home valued at $250,000 would have equity of $150,000.
A loan using the equity of a home can take one of two forms. The homeowner can either get a home equity loan and borrow a lump sum amount or use a home equity line of credit, typically known as a HELOC. A HELOC grants the homeowner access to a revolving line of credit until the principal must be repaid, which can be for a period ranging from five to 10 years, and the borrower only needs to pay the interest charges during each periodic billing cycle.
Keep in mind that as with a secured personal loan, defaulting on a home equity loan could lead to forfeiture of the asset.
3. Borrow from family or friends
You may want to consider asking family or friends for financial assistance if you cannot get a loan from a bank or other lender.
If you take this route, it's in everyone's best interest to be sure the terms of the loan are put in writing. Even though these are people who care about you, and you care about them, no one will want to get into any disagreements about the loan and then have it negatively affect the relationship.
4. Prepare for the next time
If you're experiencing financial trouble right now, there's no reason not to be proactive to prevent more damage. Preemptive damage control can be accomplished through a variety of simple steps:
- Make a budget and stick to it
- Switch to cash instead of using credit cards
- Focus on paying off your debts using an acceleration strategy like the debt snowball method, i.e., pay off smallest debt(s) first.
The Bottom Line
There are many resources you can turn to for help if you encounter financial troubles. Personal loans, a home equity-based loan, or assistance from loved ones may be able to help you to meet your debt obligations. If the problem is more serious, you should consider reaching out for professional guidance.Contact Information:
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Original Source: How to Get Help When You're in Financial Trouble