Understanding Debt & Wage Garnishment
There are a lot of reasons why people end up in debt. In fact, medical bills are actually the top reason why people have to file for bankruptcy. But no matter how you end up in debt, you need to figure out a way to get it under control. If you’re struggling in this department, you might end up having to cope with wage garnishment. This is a tough situation and can make your life miserable. Here’s how you can deal with your debt if you’ve gotten to a place where you’re dealing with wage garnishment.
What Is Wage Garnishment?
Wage garnishment sounds like a good thing—like an extra side to come with the main course of your income (oh, we wish). But in reality, it’s just about the opposite of that. People experience wage garnishment when they’re behind on paying their debts.
For wage garnishment, creditors automatically take a portion of your paycheck each month. There’s also something called non-wage garnishment, which allows lenders to take funds directly from your bank account. It’s pretty clear why no one would want either of these to be imposed on them. Still, around seven percent of workers have to deal with wage garnishment.
Know Exactly How Much Money You’re Taking Home
Don’t let yourself fall behind on your finances when you’re dealing with wage garnishment. It can be discouraging to feel like you’re not actually bringing home the money you earn. However, being passive about the situation isn’t going to help you get out of it. It’s a good idea to put together a comprehensive budget, factoring in the wage garnishment, to get a better feel for your finances. Here’s what you need to accomplish this:
- Gather up all financial statements. This will include bank accounts, bills, pay stubs, investments, or anything else that factors into your net cash flow.
- Determine your income with the wage garnishment. Of course, this isn’t going to be a fun activity, since it’s going to be lower than what you deserve. However, doing this will help you get a better idea for how much you can actually spend each month. Make sure to use your after-tax income, as this will be the true reflection of how much money you’re actually taking home.
- Calculate all expenses. These should be divided between essential and non-essential costs. It’s possible that you’ll be able to find ways to cut back how much you’re spending in both categories. Try to get a roommate, or a less expensive housing situation. Spend less dining out. People spend about $3,000 each year on prepared meals. That’s a lot you can cut out of your expense category. Also try to cut non-essentials like gym memberships or streaming services you don’t use that often.
Consider Other Debt Relief Approaches
You might be able to use another form of debt relief in order to end your wage garnishment in less time. There are organizations that specialize in helping consumers get their financial lives back on track through various programs. Freedom Debt Relief is one of the most popular agencies for aiding people in this way. They’ve even helped people completely eliminate their debts in as little as 24-48 months. You can take a look at Freedom Debt Relief reviews to see how happy others have been with their services.
Look for Additional Income Sources
You can pay off your debts in less time if you find ways to boost your cash flow. There are several ways you can go about this. First, consider if you can get more money at your current job by asking for a raise. If this is out of the question, you can search around for other openings that offer higher wages. It’s also possible for you to bring in additional income by getting a part-time job, or freelancing in some capacity. There are lots of opportunities out there if you’re willing to put in some effort.
Sell Items to Pay Down Your Debt
It’s not the ideal option, but selling some of your possessions is one way to quickly pay down your debts. Create an eBay account and start selling things that you aren’t using on a regular basis. You don’t need to get rid of everything. However, every additional bit of income in this way will bring you one step closer to getting out of your wage garnishment situation.
Debt is a scary thing. This is especially the case when it starts directly impacting your life. Consider these ways to reduce your debts and end your wage garnishment.