What is debt? Debt is money borrowed. Either you do it from proper financial institutions or someone personal, all are categorized under Debt. Why Debt? Any individual or a corporation at times cannot buy/conquer all they want with the liquidity of money they have at the moment. And hence they take debt.
How is it done? A Debt is a condition that happened between the borrower and lender with some of the repayment terms of the money involved in the whole transaction.
There are people who categorize debt into good debt and bad debt. Like the good debt is something where after putting in the money it is worth and if taken for investment or growing business it works in favor. There are some debts which when taken and used, either make the money stagnant or dips in a loss and is hence considered a bad debt. However, a borrower should always think of debt as a debt. There is a liability and that has to be taken care for as soon as one can. Good, bad etc is not that important. But repaying the debt is. But since bed debt is something to be taken extra care for as the planning how one must have done while taking a debt is not going to work and this may create a cash crunch or something like that. And hence, it’s something to worry about.
The first and the foremost thing that is to be to take care for is: check which debt you have taken and if that is not working as per your exceptions and you sense of a burden for the fund. Investment in some property or investment in some mutual fund or stock etc. If in some business that you have invested and now it is not showing any returns, then in that case too it’s time to think twice. Try cutting on your credit card usage.
Let’s look at a few of the options about what all can one do when in bad debt.
Once you analyze that you are in debt and that is turning or already turned bad, all you have to plan is how to deal with it. So, make a note of all such possibilities, which you might have already done, but once again. And start planning on which one to act first. If you can’t seem to do it your way, try doing planning it with someone else like professional help.
If possible, the losses are bearable with a bit of burden, liquidate the asset, stock or any investment as soon as you can before make more losses. Once that is sorted, check on non-asset classified debt where liquidation is not possible.
In context to the prior point, if the money you have put in somewhere where the thing is not something that is saleable and it looks difficult to get the money back, don’t feel ashamed. Talk to the one who may have said or advised you to put in money. It’s better to keep shame aside than be in loan defaulters list.
Cut down on your costs. When you sense that your money is blocked, try spending as less as possible in various things. For a while, you may have to cut down on lifestyle. Rather than going to an international holiday, do a domestic one. If you usually go to restaurants twice or thrice, try going once. Check on with your credit card statements.
Speak to your banker and explain them the situations, and assure that you will pay the debt as soon as you can and eventually you will be debt free!