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Oh no! I Have a Debt I Can't Currently Pay Off!
Last month, I decided that I needed a Persian cat, a breed that typically costs about $3,000. I've already missed a payment, and the fees for my loan have gone up quite a bit. I need to develop a budget, fast! -
What's Going to Happen Now?
Now that I've got such a great debt on my hands, the loan I've failed to repay will lower my credit score (page 10, OL Textbook). It'll also be more difficult to get approved for new credit cards or loans, because now my applications are now more likely to be denied (page 10, OL Textbook). And if I do get approved for a credit card or loan, I'll have to pay higher interest rates (page 10, OL Textbook), due to the higher risk being taken by creditors to grant me loans. -
Creating a Budget
In order to create a plan on how I will pay off my debt, I must first do a realistic assessment of how much money I spend and make (page 8, OL Textbook). The goal of this plan is to make ends meet on the basics (housing, food, healthcare and education), while saving up enough money to pay off my debt (page 8, OL Textbook). -
My Final Plan:
Income from all sources: $1,200 per month.
Fixed expenses: Rent- $750 per month
Varying expenses: Groceries- $50 dollars per month, Clothing-$20 per month, Entertainment- $20 per month If I follow this plan, it will take a bit less than 9 months to pay off my $3,000 debt.
