Many people resort to buying against their credit card or borrowing from an office mate or a close friend to survive from pay day to pay day.
But a habit of borrowing, coupled with poor personal financial management, can land you in deep indebtedness and cause you to lose your home and lose other people’s trust.
Crawling out of debt is not easy – but it can be done. Financial planners share some sound advice for overcoming your money debacles.
Money drainersBefore taking those small steps to debt freedom, recognize what practices contribute to your accumulation of debts:
- Overspending: Spending more than they earn is the most common reason people get mired in personal debts. And the most efficient tool for over-spending is the credit card. Unfortunately, credit card misuse can get you into deep trouble by spending money yet to be earned.
- Absence of a financial safety net: Even wise spenders can suddenly find themselves in debt if they get caught unprepared by life-changing circumstances, such as a medical emergency or a death in the family. If you haven’t taken steps to protect your family against financial impacts, unfortunate events can easily get you into serious debt.
- Lack of plans for the future: Not having concrete goals, such as “we need to have out own home in 5 years” or “next year I sould be able to afford an educational plan for my child” can worsen your overspending tendencies. It is important to educate oneself on financial planning and the importance of savings.
- Being materialistic: Being unable to differentiate needs from wants can get you into a personal debt crisis
Path to freedomFollow these practical tips to start eliminating your debts.
1.Live within your means. Make a budget and stick to it. List down how much money comes in and how much you can afford to spend and what you can set aside for savings and debt payments, Your best chance of fixing your debt problem is a simple lifestyle change. So stop comparing yourself with others and be satisfied with hat you have.
2.Pay yourself first. Immediate reserve 10% of your salary for savings every month. The savings can then be put into investment plans. Take an insurance plan that you can comfortably pay even if it means being under-insured. Under is better then nothing.
3.Make debt payments a priority. No matter how long it takes, pay off loans one at a time until they are all zeroed out. If you have multiple credit cards, transfer all balances to the card with the lowest interest rate. Cut up all the other cards and avoid using the remaining card until all debts are paid.
4.Get the whole family involved. Make your financial goals a family project. Help children understand why everyone needs to tighten their belts, teach them how to save and train them to prioritize expenses.
5.Start a sideline or home business. Start a small venture base on whatever interest you have using the minimum investment to help yourself earn some extra money and widen your entrepreneurial experience.
Being free from debt is an arduous process, but the rewards are well worth it- peace of mind and the opportunity to start saving for your family’s future.
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