It would seem that everyone is aware of the dangers of living with too much debt. After the events of the last two years, anyone who does not yet know that having a high level of debt will have a negative impact on your financial security in the present and years to come should quickly take a look around them.
For example, losing your job is a horrible experience made more so if you have to struggle to maintain your living expenses while repaying high interest debt. There simply is no reason to remain in debt at this point in time. Therefore getting out of debt and staying out of debt should be the main priority of individuals as the economy is teetering on the “recovery” period. Here are a few tips to help you get out of debt and maintain debt free living in the future.
If you have not yet started an aggressive assault on your debt balances, you can not afford to put it off for another day. With changes happening in the credit card industry still not complete (like the number of 0% balance transfer credit cards), obtaining and using credit will surely continue to be an added cost for most consumers. The following tips can get you started to eliminate your debt and live debt free in the future.
Take inventory
If you haven’t already, you need to first sit down with records of all your financial obligations to determine exactly where you stand in terms of debt. Most people are surprised to realize just how much money they owe and how much it is costing them to pay interest charges and penalties each month if they are not paying each bill on time every time. List your debts in order of highest interest rate or lowest balance and determine if you have the resources available to begin applying all available disposable income toward repayment. You will want to do this one account at a time to see the best results. Hopefully you have a a savings account and have looked at the top high interest savings accounts page by Patrick.
Determine if you need help
There are situations that have gone beyond simply buckling down and paying your bills in the traditional manner. If you are facing a severe financial hardship and have no reasonable way to pay the minimum payment let alone more money, you may want to consider some of the other options available to eliminate debt. They all come with negative consequences, however for people who have no other way to get out of debt, it is a chance they often have to take to finally eliminate their debt once and for all.
Changing your spending mentality
Regardless of the method used to eliminate debt, the only way to avoid the same problem in the future is by changing the habits that caused your indebtedness in the first place. For the majority of individuals the problem is not the lending industry or other forces; instead the problem is in how you handle your own personal finances. Each person must accept responsibility for their own actions and make it a point to avoid unnecessary spending and living beyond their means in the future. Otherwise you are doomed to repeat the same mistakes in the future and find yourself dealing with the same problems in down the road.
These tips have been offered for years, however they bear repeating in that some people have made it through the recession relatively intact-financially. For those individuals who have not yet realized the problem of carrying too much debt it is only a matter of time before they face a situation which brings the problem to the forefront. Do not wait until you are unable to address the issue, take the steps necessary today to eliminate your debt and begin a life of financial freedom.
{ 4 comments… read them below or add one }
First step back and figure out what your issue is has to happen before you can solve and problems and take action. Planning is key to achieving debt free living.
Great tips. I’d add that when you take your financial inventory, look for areas where you can reduce expenses, such as eliminating premium cable channels, cutting back on eating out, etc. It helps to track your spending for a month or two, then create a budget. Once you know how your total income and outflow, then accelerate your repayment schedule.
Great post. It’s amazing how many people are not thinking about the future when it comes to finances. Of course your debt is going to be hard to pay off and live without, but you will feel better after you get rid of it. And probably sleep easier too
Jeff
Financial security is hugely important to a happy family. Money was the number one issue in my family, even when debt free. I think attitudes to finance should definitely be something to look for with someone you’re having a relationship with.