Everyone aspires for financial freedom and an account free of debts. Debts usually come from using credit cards to pay for bills and the things we buy, and one missed payment can spell all the difference. The worst mistake one can make when debt becomes too overwhelming to handle is to ignore it. Simplify your life and launch a constructive process in handling your debts with some of this advice:
- Sit down and do an accounting and an assessment of your financial cash flow. Organize your bills and jot everything down in a record book, which you should continually update. This way, you will see the exact picture and know which payments you need to prioritize first and for how much you can afford to make the payments. Have a solid plan. Study each of the bills carefully and know more about interest payments you are making. It would be a good idea to pay debts that bear highest interest rates to quickly eliminate the possibility of it growing into double-digit interests. You will have a more difficult time getting out of debt should this happen.
- Downsize your credit card. Do you really need ten credit cards? Remember that it is so tempting and so convenient to use but you are still essentially borrowing money.
- Cut back on your expenses. Do you really need all those cable channels or all those mobile features? Or would you be better of downgrading to a more practical plan? If you love to shop for designer brands, put this on hold for a while. Do away with some of the luxuries for now, as you have to learn to live within your means.
- Hold a garage sale or put some of your items up for bid. This will help you raise funds you can use to pay off your debt and at the same time get rid of the clutter and junk in your house.
- Coupons make a lot of sense right now. Some people are usually not fond of shopping using coupons but it is actually very helpful and thrifty. You can save a lot using this. You should also learn to cut back on grocery by buying only items that you need. Some grocery stores offer budget packs, which are pretty convenient and necessary.
- Do not be ashamed to borrow from family or friends. Everyone has problems dealing with debts, yours is not an isolated case. The people close to you should be able to understand your situation and help you out. Make an effort to pay the money you borrowed though and make an arrangement to pay for this even in small increments.
- Watch for storewide sales and even online sales. You could get great deals from buying items with huge discounts. However, do not get carried away while shopping. Even as there are huge price cuts, you don’t have to get the things you don’t have a lot of use for right now.
- Avoid using your credit cards for the meantime, until you are comfortable enough to have paid off at least half of what you owe.
Making sacrifices at this point and instilling discipline with how you spend your money are two things that will help you get through this most difficult period. But know that this is not permanent and you will pretty soon live debt-free.