Nobody likes finding themselves immersed in debt, and settling debt is one of the most relieving things a person can do. Being in debt can cause people to stress, which can take its toll on a person, both mentally and physically.
However, people all over the world borrow money, and in today’s society, it is normal for individuals and businesses to take a loan to help them finance things like education, property, vehicles, etc. Understanding what others owe you is key to paying back a loan.
As most accountants and business owners know, trying to get clients to pay outstanding invoices can prove tricky. To avoid any problems, debt management is vital.
There are lots of debt management options out there, including software like Payt that make managing debt a lot easier. Other strategies include hiring a professional service. By hiring debt professionals, they will help you with personal finance and debt relief. A debt relief company is there to help the debtor eliminate their debt, while there are also credit counsellors and financial advisors that can help people control their financial situation, debts, and financial habits.
What are the main Problems with Being in Debt?
Even if it is considered a “good debt”, the reality is, any debt can cause problems. In 2021, the average US citizen owes $15,950 in credit card debts. Almost half of the American population carries credit card debts each month. On average, college students will graduate owing $40,000 each. Those who decide to further their education once they graduate owe significantly more money. Recent reports claimed that one in every five that are in debt owe more than $50,000 in college loans. Leaving university with this much debt can prove extremely difficult, especially if they are planning to have a family and purchase a home.
Debt seems to affect people differently. Some suffer from stress and anxiety when they owe a small amount of cash, while it doesn’t seem to bother others who are up to their eyes in debt. Being in debt can cause a lot of different emotions including the following:
- Anxiety and depression: A recent study showed that 29% of people that owed a lot of money also showed they had severe anxiety. Those who are in debt can develop much higher rates of depression and stress.
- Resentment: Being in debt can cause stress, but to make matters worse, family members, friends, and loved ones can feel resentment towards those who are in debt. Coping with debt is very difficult for a lot of folks, but having their partner blame them for their financial issues can make things a lot worse. There are many reasons why people resent others for being in debt, especially if they have lost their job or continue to spend money carelessly.
- Frustration: Although you can prepare for the future, not one of us can predict what is around the corner. There are lots of unforeseen events such as a death in the family, unemployment, being admitted to hospital, etc. that cost a lot of money. At the moment, there are around 56 million American adults that are finding it difficult to pay back outstanding medical bills. In fact, this is the main reason why so many Americans file for bankruptcy. Financially planning for the future is not easy, but when something happens, especially a negative event in your life that costs you a lot of money, paying it back can serve as a constant reminder.
To avoid finding yourself in serious debt, it is important that you think about debt management options sooner, rather than later.
Good Debt Management can make you Wealthy
When you owe money, it’s difficult to think about building wealth, because settling your current debt will more than likely be your main priority. However, building wealth is vital because it guarantees you and your family a good livelihood and security for the future. Plus, owing a lot of money can cause lots of health problems, such as insomnia, heart complications, and depression.
A lot of the debt management strategies out there will help you reduce the amount of money that you owe, and getting out of debt will help you build for the future.
Being debt-free allows you to live your life, and not have to constantly worry about financial issues. Having a good credit history with the banks and building societies will help you borrow money down the line. If you want to start your own business or take out a mortgage, having a good credit history is very important.
Swimming in Debt because others owe you Money
Businesses go bankrupt on a regular basis because their clients are unwilling or unable to pay what they owe them. Most companies give their customers products and provide services on credit, and trying to get paid can often prove extremely challenging.
The ongoing pandemic has had a devastating impact on businesses all around the globe, and many have found themselves in financial difficulty. Businesses have racked up plenty of unpaid debts during these unprecedented times, and many predict that the road to recovery will take a long time.
There are plenty of ways to encourage clients to pay on time including the following:
- Ask them to pay straight away: Although a lot of clients expect to be given credit for a certain amount of time, a lot of individuals and businesses like to pay immediately to avoid owing money down the line. To encourage people to pay, consider offering them a discount. Although a lot of people won’t pay upfront, there is no harm in asking.
- Automate invoicing: There is plenty of software that allows for automotive invoicing and provides the customer with an automatic invoice follow up. In case you forget to follow up on clients with outstanding bills, this software will help you get the job done, so you don’t have to.
- Hold products or services hostage: If a client asks you for more products or services yet they still haven’t paid for their previous order, consider holding on to the products or don’t provide them with another service until they have sorted out the outstanding bills.
- Legal advice: If the client is still refusing to pay you, you might have to seek legal advice for help. Although this is probably your last resort, you might have no other choice.
Being in control of your debt will change your life for the better. Although it is impossible to foresee what is coming around the corner, by employing a good debt management strategy. Understanding what you owe, how you are going to pay it back, and how long it is going to take to pay back is critical.
Leaving bad debts build up can have a major impact on your life. However, without being able to borrow money, very few of us would be able to afford a home or educate our children. So making sure we maintain a good credit history will help us take out loans in the future.
If you are owed money, managing payment plans for others is also very important. If you are not being paid for goods and services you have provided for your clients, you too can find yourself in financial difficulty. Making sure you keep on top of clients will help you get paid for what you are owed.