Stay Out Of Debt Collection
Nothing feels more discouraging and even frightening to get a call from a debt collector. This holds especially true if you own a business that’s about to go into collections. However, you don’t have to be at the mercy of the debt collection companies. Here are four steps you can take to help you stay out of debt and out of collections.
1. Have an Emergency Fund
Dave Ramsey, one of America’s most respected financial advisors, tells the readers of his book “Total Money Makeover” that they need to have an emergency fund. The fund should be $1,000. It should also be earmarked for true emergencies only. That would include an unexpected accident in your automobile or a trip to the ER after a softball game gone bad. Vacations don’t count as emergencies …show more content…
If you know that you’ll need $2,000 to take that vacation you want, then you’d need to put $167 into the account each month for 12 months. When vacation time comes, it’s already paid for.
3. Stay Out of Debt
It might be obvious, but if you’re not in debt to anyone, you’re less likely to go to collections. In light of this, Nerd Wallet tells its readers to stay out of debt once they’re out. Part of the issue is that people really don’t know what they actually spend each month. Nerd Wallet suggests knowing who all your debtors are. Contact them. Make a plan to pay off what you owe.
Additionally, if you’re a business owner, some of your debt may be due to bad debts owed to you. You need to have a plan in place in case you have clients that skip out on you. You can attempt to collect on these types of debts by contacting the client and making payment arrangements.
However, if the situation gets too bad, you may have to have the help of an attorney. Every businessperson should have some sort of legal representation for this very reason. Here are some resources that can help you through a situation like …show more content…
Have Cash in the Bank
Financial planners like Dave Ramsey will tell you that you should have between six and nine months of income in the bank in case you suddenly lose your job. Many people actually live paycheck to paycheck. A financial downturn like a job loss hits them particularly hard, and they often go into debt just trying to stay afloat.
If the job loss lasts longer than a couple of months, these same people eventually find their accounts in collections. A cash cushion can help stave that off and even keep them out of collections in some cases. And if it’s your business that’s behind, it can mean the difference between staying afloat or going to collections and possibly bankruptcy.
And again, if you do need to use this resource remember to replenish it once you’re employed again.
Final Thoughts on Staying Out of Collections
Staying out of collections is often a matter of planning ahead. Paying off your debts and having money in the bank helps. So does knowing what you spend each month. Knowledge coupled with action makes you powerful when it does come to keeping those collections calls at
1. Have an Emergency Fund
Dave Ramsey, one of America’s most respected financial advisors, tells the readers of his book “Total Money Makeover” that they need to have an emergency fund. The fund should be $1,000. It should also be earmarked for true emergencies only. That would include an unexpected accident in your automobile or a trip to the ER after a softball game gone bad. Vacations don’t count as emergencies …show more content…
If you know that you’ll need $2,000 to take that vacation you want, then you’d need to put $167 into the account each month for 12 months. When vacation time comes, it’s already paid for.
3. Stay Out of Debt
It might be obvious, but if you’re not in debt to anyone, you’re less likely to go to collections. In light of this, Nerd Wallet tells its readers to stay out of debt once they’re out. Part of the issue is that people really don’t know what they actually spend each month. Nerd Wallet suggests knowing who all your debtors are. Contact them. Make a plan to pay off what you owe.
Additionally, if you’re a business owner, some of your debt may be due to bad debts owed to you. You need to have a plan in place in case you have clients that skip out on you. You can attempt to collect on these types of debts by contacting the client and making payment arrangements.
However, if the situation gets too bad, you may have to have the help of an attorney. Every businessperson should have some sort of legal representation for this very reason. Here are some resources that can help you through a situation like …show more content…
Have Cash in the Bank
Financial planners like Dave Ramsey will tell you that you should have between six and nine months of income in the bank in case you suddenly lose your job. Many people actually live paycheck to paycheck. A financial downturn like a job loss hits them particularly hard, and they often go into debt just trying to stay afloat.
If the job loss lasts longer than a couple of months, these same people eventually find their accounts in collections. A cash cushion can help stave that off and even keep them out of collections in some cases. And if it’s your business that’s behind, it can mean the difference between staying afloat or going to collections and possibly bankruptcy.
And again, if you do need to use this resource remember to replenish it once you’re employed again.
Final Thoughts on Staying Out of Collections
Staying out of collections is often a matter of planning ahead. Paying off your debts and having money in the bank helps. So does knowing what you spend each month. Knowledge coupled with action makes you powerful when it does come to keeping those collections calls at