By Muktu
Having debt problems can affect every aspect of a person’s life if they get out of control. They can be much more than a matter of money since a large debt can affect people mentally and emotionally. In more severe cases, debt can impact a person’s family life and erode relationships where fights about money are common. One of the most frustrating aspects of owing money is how easily a person can accumulate debt in the first place. There’s something about human nature that allows for us to let spending get out of control. And sometimes it’s not even about wild purchasing habits, but more a reluctance to keep track of spending and available funds. And for students fresh out of school, they might be saddled with a student loan debt right from the start. Whatever the case may be, debt is easily attained and millions of people across the world suffer from this problem. Thankfully, there is usually no debt that cannot be tackled as long as the proper avenues are pursued.
Debt Elimination!
Signs of Debt Problems
While many people live with some degree of debt, the signs of a larger existing problem can be quite dramatic. If you can only afford to make minimum payments on your credit card, or no payments at all then the situation might be on the verge of getting grim. Some people make the mistake of using one credit card to pay off another to buy some time, but if time runs out and your debt is still around then you still have the overall problem. Other signs of a debt problem include having very little money left over to make every day necessary purchases, not knowing exactly how much you owe credit card companies, and using your credit cards more and more each month.
These problems can manifest in emotional ways on a person level by causing a person to feel a general sense of uneasiness. If they have begun to avoid calls from credit card companies and collectors, it can feel like living a life on the run. There can be a mental toll on constantly having to check caller ID to see who’s calling, and some people don’t even bother to open up their credit card statements anymore. It can be extremely stressful to have to watch every penny you spend, knowing that each purchase will put you deeper into debt by the end of the month.
As for relationships, sharing a life of debt problems with another person can put a tremendous strain on a marriage or partnership. In some cases, the debt is incurred primarily by one person in a relationship and this can lead to further problems. The unfortunate thing about debt in relation to marriage is that many otherwise healthy partnerships have fallen under the strain. The process of working on debt resolution can wear on a marriage as the stress increases with each month and year.
It might help to know that if you are looking for ways of paying off debt, you are not alone. Many two-income households with healthy yearly incomes are experiencing debt problems as well. Of course, the nature of the economy is not helping things as some people are experiencing lay-offs and job loss on top of trying to navigate through the process of debt elimination.
Avoiding Debt Problems
Here are some healthy money habits to avoid a debt problem in the first place. Of course, not everyone who already has debt will have the luxury of a fresh start, but these are tips that can help to make sure the problem doesn’t develop again.
1. Have only one credit card and make payments regularly. Use it wisely to improve your credit limit, but otherwise don’t buy anything with it that you cannot afford at the time. Don’t tell yourself you can afford to pay for it later because there is no guarantee of that. Other purchases should be made with cash that you know you already have.
2. Put a percentage of your earnings into savings and don’t touch it. You will find different advice on what these percentages should be, but they will depend on your situation. Just remember, anything is better than nothing. Your savings should be considered an emergency fund that you rarely use, and paying off debt may be one of the reasons to tap into it.
3. Keep accurate records of all your finances, and that means EVERYTHING. From buying gas or groceries, to getting a donut at a coffee shop, or if you make a payment for your cell phone – everything should be put into a spreadsheet so you know exactly where your money is, and where it is headed.
4. From your records, you should be able to come with a budget that you try to stick to every month. Of course there might be some unexpected occurrences, but you should plan for that too by having an appropriate category of spending.
5. Food can be a huge source of spending for people and families, and eating out can be extremely expensive. So while you don’t want to deprive yourself entirely, keep tabs on how much you spend for fast food or at restaurants. Try to cook for yourself when you can because it will be cheaper and healthier. Don’t be afraid to shop around for good deals, or use coupons wherever you find them. People can save huge amounts of money on smart food shopping.
6. Another huge expense comes in the form of leisure and entertainment. For example, going to a movie theatre can cost a couple at least thirty dollars, not including money for parking, drinks, and snacks. There are plenty of free ways to have fun on a date or with your family such as enjoying the outdoors, or looking in the local listings for free events. Doing this two times a month can save you a couple hundred dollars which can be put into the bank, or used for debt elimination.
7. Staying out of debt takes a bit of restraint, but not as much as if you end up with a huge debt problem. So make some realistic choices so you don’t have to sacrifice completely later. Think about the things you want, but might not really need like new clothes, jewelry, or music CDs. The things that cost you monthly can also be a killer like fancy cell phone plans or gym memberships as they are just more ways to have you end up paying off debt as well.
8. Get media savvy. So that means being aware of advertising and how it is implemented. Don’t get drawn in by exciting infomercials and be conscious of product placement. Each day people are bombarded with images and messages that tell them to spend. People feel the need to have these things in order to feel complete but it comes at the cost of a healthy bank account. So take stock of what you really need and try not to fall for what the media wants you to buy.
Handling Debt Problems
Many of the tips just given for avoiding debt can also be used to alleviate it as well. So if you already have a substantial amount owing, a good debt resolution plan can benefit from doing any or all of these things. In addition, here are some further steps you can take:
1. Try to pay off the credit cards with the highest interest rates first. It might be like pushing a boulder up a hill, but the key is to get rid of this debt first so that you simply aren’t wasting any more money. Try to whittle yourself down to the least amount of credit cards you can, and cut up the ones that are paid off.
2. Contact your creditors. You don’t have to look at your creditors as enemies. The money you owe them is real, and it is your responsibility to pay them back. Of course some bitter feelings can arise when you think of interest rates and how much money you can waste overall. But sometimes you can work out an appropriate plan that works for both you and the people you owe money. Remember, if you are in such a bad position that you can’t afford to pay them anything, then they will lose out on money as well. So in many cases it will be in their best interest to work out a process of debt elimination that might include a lower interest rate.
3. Consolidate your loans. If you can turn all your little debts into one larger debt, thing will get much more manageable. Of course you will want to work out a reasonable interest rate and keep up with payments, but consolidating your loans might just be the step you need to gain some focus on the situation.
4. Look at your assets and figure out how to use them. If you have any luxury items that you don’t really need, you can sell them to pay off your debts. You might also have to downsize a bit when it comes to house and home. Obviously it is painful to have to alter your standard of living, but it might just be the thing that gives you the leeway necessary to find an effective debt resolution. And remember, if you manage to pay off your debt you will not be starting from zero. You will still own whatever you own, and even better, your overall value will no longer be in the negatives. It’s entirely possible to start over again and if you implement some smart debt tips, you will be able to save money rather than use it to pay off a debt problem.
No comments:
Post a Comment