Guest post by: Bethaine Parker of Debt Consolidation US
Getting into and creating tens of thousands of dollars of debt is easy but getting out of it can be a silent killer and take decades to pay off.
When you make the last payment and become debt free, you may want to reward yourself. The problem occurs when you’re not attentive; it’s easy to slide back into the same spending habits and you may end up right back where it started.
Here are a few tips that may help you to stay on track and keep you out of debt for good.
Plan a budget
Planning a budget and following it can be helpful in solving this issue. A budget helps in analyzing your spending, and planning ahead. It is an effective way to put a halt on impulse spending.
Make radical changes in your lifestyle
Window shopping in search of the latest fashion or roaming around in your leisure time needs to stop. These things entice you to purchase. You need to change your lifestyle if you expect to have a debt-free life in the long run. Lowering your cost of living and a minor change in your lifestyle is one of the many ways to achieve a debt-free life.
Distinguish between your needs and wants
Many people face difficulties in distinguishing between wants and needs. If you can’t differentiate, it may tempt you to spend more.
A need is something that you require to survive while a want is something that people desire to have. Wants make your life enjoyable but don’t let your wants turn into needs. Be happy with what you have.
Start carrying cash instead of credit card
Is using a credit card a weakness for you?
Using credit cards is not always bad. It depends on how you use it. Doing everything with a credit card can affect your credit negatively if you can’t make your payments on time. In turn, it can affect your ability to take out money at favorable terms and conditions.
So, make a promise to yourself, especially if a credit card is your weakness; limit the number of cards you use and charge for the things, which you know you can pay in full when bills are generated.
Stop creating more debt
Credit is risky. If you can’t manage your credit cards properly, try to pay everything with cash. Reduce your temptation to create more debt by cutting up or freezing your credit cards.
And, if you use a credit card, repay the outstanding balance at every billing cycle.
Sell collateral assets to pay off the loan if required
Obsession for luxury is dangerous. Need for living like cars and houses is good but craze for extras is risky.
If your obsessions are purchased with credit and you are unable to pay the amount in time, you may need to sell extras for paying off the loan if you can’t manage it. For example, you can sell your extra car and plan your commute together with your spouse.
And, if you’re unable to resist your temptations, make a plan beforehand to purchase. And, avoid credit card usage to fulfill your wants.
Go with like-minded, debt-free friends
Stop surrounding yourself with people who make it hard to live a debt-free life. Try to communicate with like-minded friends, who will stand beside you at the time of struggle and cheer you on for making the right choice.
They can also help you overcome your financial stress and can guide you properly to manage your finances in a better way.
Create a debt repayment schedule
What if you already have debts to pay off?
Nobody gets out of debt all of a sudden.
A systematic repayment is what you need to keep the track and repay debt.
Decide which debts to pay off first and it should be done based on two factors – outstanding balance and interest rate.
If you can’t repay your debts in full, then you can call your creditors to negotiate a lower interest rate. Higher interest rates keep your debt for a longer period. If you have maintained a good relationship for a few years, you may be in a much better position to qualify for a lower interest rate. This can help you save some money on interest payments as you pay down the debt over a certain time.
You may be able to find a lower interest rate by seeking out promotions, too. With the help of the balance transfer method, try to repay the balance before the expiry of the promotional rate.
After that time limit, if you aren’t able to repay the balance on the new credit card, then the interest rate of the new credit card might increase.
Don’t lose HOPE!
There are hundreds of reasons why you should not quit or delay your efforts to get out of debt. Debt drains the mental and emotional feelings of the person, particularly if he/she is having in a large amount. So, before spending, it will be better for you to analyze whether or not you can afford the expense. Yes, you need to resist your temptation if required. Or else, the last option to get rid of debt might be bankruptcy.
Therefore, it is always better to stay away or manage your debts properly for a peaceful life.