Debt is practically unavoidable if you wish to lead a comfortable and normal life. Some people manage their debt properly and others need a helping hand now and again; but the important thing is to realise that money problems are a natural occurrence in life. Being in debt is not desirable by any stretch of the imagination, but it isn’t so unusual that people should feel ashamed to admit they need help. Anyone’s financial situation can change because of events that they have no control over and some people can make questionable financial decisions. Debt collectors treat them all in the same way, regardless of how well the debtor faired in the past.
How to Manage your Debt
The last thing you should do is accept more credit if you have debts that are worrying you. More active credit agreements simply mean more that require attention and that can bring its own problems. For example, miss a payment on one loan or credit card and you will probably face late payment charges. Miss a payment on another agreement and you suddenly have mounting missed payment charges; all of which are additional expenses that when paid, do nothing to reduce your credit agreement balances.
You can only reduce debt if you break the cycle which resulted in you struggling with finances in the first place. Although I’ve said you should stop taking on more debt, there is one exception. New agreements are only advisable if the new credit agreement is to consolidate existing debts, which will reduce the overall interest rate and the amount you are paying each month.
Change Your Lifestyle
You may not realise it, but humans are very much creatures of habit. When you understand this, you can recognise when you are likely to let yourself down and fail in your debt recovery. Unnecessary spending often masquerades as essential purchases, but lifestyle changes can reduce your outgoings without altering your quality of life. You can entertain your family and relax after work without relying on Sky Movies and Sky Sports. It’s not ideal, but if your HD Sky package is costing you £70 per month then you need to consider whether or not you can really afford the luxury.
Eating takeaways or eating out can often seem like a cheaper way of living, as you can feed a family of five for £15 or so at KFC or some other fast food outlet; but you can definitely eat for less at home. It’s all about changing habits and accepting your lifestyle is not maintainable in its current state. When your debts reduce and your outgoings are not hampering your ability to live life to the full, you can always revert to enjoying some of the luxuries you had before.
Plan the Treats
You don’t have to be a hermit that doesn’t see the daylight on weekends. Anyone can enjoy treats and days out, but plan according to your budget. There are many days out that cost nothing to enjoy and five minutes on Google will leave you wondering why you needed to max out your cards to have fun in the past. Fun days are important because without them you can often wonder why you need to go without so often; or work all week with nothing to show for it at the end.
The important thing to remember is that treats are treats and are not something you or your family can take for granted. That means borrowing to pay for them is a definite no-no. That includes new clothes, music or entertainment that you can survive without having for a few weeks. Commit to change and you will be surprised at just how quick your finances begin to improve.