No one enjoys debt, and, for the most part, we all have it. Having debt and being immersed in it are two very different things, particularly when you analyze the type of debt and what you’re doing to either fix it or make it worse.
There are a few tell tale signs that you are really struggling with debt, more so than just having a house, car or a few credit cards you’re paying on from one month to the next. This is about debt that you’re floundering in, and being able to step back and see first hand what you’re doing to make it worse, financially speaking.
For starters, if you’re in debt and have a lot of unsecured debt (credit cards), you really shouldn’t be asking for more debt or adding to what you already have. Even worse, if your borrowing needs are still inflamed, you should steer clear of a cardinal sin when it comes to money: borrowing from yourself in the form of a 401K loan.
Not only do you pay stiff penalties for early withdrawals but also taxes and other fees that are involved with this, not to mention the fact that you have to pay it back (another payment that you have to account for).
Another element of your retirement and being in debt is asking for a hardship. A lot of 401K’s protect us from ourselves and only allow you to use a hardship loan for things such as a first time home purchase or medical expenses, but a lot of those same financial companies don’t bother to reaffirm that you’ve actually used the money for what you say, and thus those who are struggling financially might use that money to pay bills or spend it frivolously (you want to at least you use for the intended reason or to pay off other debt).
Finally, paying your bills should never happen at the expense of doing so with a credit card. If you’re having money woes, you might rely on credit cards for every day purchases like grocery stores trips or paying your cable bill, and that is only going to not only add to your debt but make a $100 grocery store bill into something you end up paying, with interest, three or four times as much when it’s all said, done and paid off.
Having a knock down, drag out fight with credit and debt isn’t anything new to the general public but how you react and pay it down versus making it worse is going to define your financial future.
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