Nowadays, it’s easier to apply for loans and credit cards. Also, lots of people have more than one plastic. So long as you have a good credit rating or collateral, you can borrow money to support and enhance your lifestyle. Sometimes, the ease of acquiring more money makes people spend more than they really afford. Many people have debt problems, especially from credit card companies. Some even consider themselves buried to the neck with debt.
If you have your own debts and wondering how you can make your financial situation better, here are a few ways to get out of debt and to say goodbye to them:
1) Learn about your expenses
Each of us has a rough idea of how much we spend every month. We have bill statements, grocery lists, and receipts to remind us of the things that we need to pay for each month. Still, this is not enough. If you want to take control of your expenses and pay off your debts, the first thing to do is to study your costs.
Make some time to sit down and make a list of monthly payments. Take note of all the bills that you have to pay. Monthly bills include electric, phone, water, cellular phone, internet, magazine subscription, credit card, and gym bills to name several. Also take note of your food budget and allotment for miscellaneous costs.
Your list of monthly payments doesn’t have to be complete when you make your list of daily expenses. Why is making a list of daily disbursements important? Doesn’t it seem tedious? To tell the truth, it’s very important to review how much and where exactly our money goes. This way, you’ll be aware of your spending and be able to make better decisions in your purchases. By learning about how much you spend and what you spend your money for, you’ll be able to pinpoint if you are spending unnecessarily. You’ll also be able to make adjustments to your daily and monthly disbursements so that you can use your hard-earned cash for more important things.
Lastly, if you have a hard time looking at your expenses with a critical eye, it’s better to talk to someone neutral. What I mean is, don’t ask your teenaged daughter if you should do away with the gel and mousse in your grocery list. Talk to someone who doesn’t live with you at home, because chances are, they won’t help you be objective. If you prefer professional advice, consult a reputable financial adviser or debt councilor.
2) Live within your means
After learning about your expenses, you’ll have a better idea of the more important things in your monthly expenses. Compare it with your monthly income, and understand how much you can really live with. Decide on how much of your monthly income you’re willing to spend, and make budgets for everything. If you discover that there are some items that aren’t really that important, cancel them without guilt. So what if you have to speak to the pushy representative again to cancel your gym membership? It’s your own money, your own business.
3) Earn extra money
You might have an 8-hour job, or two jobs, or no job. What you can do, if you want to earn more money, is to get another job, sell, or go into freelancing. Getting another job can be stressful, so ask yourself if you can take on another job. Look for something at home that you can part with and try selling it online. Market your skills and bid for projects for extra income. Consider your options and do a little research on them. Then make it happen.
4) Pay your debts as much as you can
After reading the previous three tips, you know more about the right ways to get out of debt. You’re aware of how much you earn, spend, and save. Structure your budget so that you pay as much of your debts as possible, so that you’ll get rid of them faster. Also, don’t go beyond payment deadlines, because this will hurt your budget and you’ll end up paying more than what you borrowed.
5) Minimize credit card use
It’s so easy to hand over your plastic to pay for expenses you don’t even have to think. Settle on using just one card, or if you can manage it, don’t use plastic at all. You’ll just end up paying more if you’re the type of person who hates paying bills and neglects them for a while.
If you have more than one card, you have more debts to pay every month. Just bring one credit card with you, the one that has the lowest interest and credit limit, and keep your other cards in a secure place. If you have fewer cards with you, the lesser you’ll be tempted to splurge on something on a whim.
I hope you learned something about proven ways to get out of debt I just shared with you. Even if the process of controlling your finances seems tedious and boring, you’ll reap the benefits from it in the long run. Believe me, it’s the best feeling to know that you’re on the right ways to get out of debt.