Have you ever glimpsed at your wallet and wondered, "What is going on?" For sure it can be guaranteed that you are not the first to have ever done that, neither will you be last. Losing money and accruing debts, for one reason or another, has been a dangerously growing trend and has left many bankrupt and hopeless. However, like most problems in life, it doesn't lack a solution. If you've found yourself in this sticky situation, please feel free to use some of our tips to help you on your journey to a financially strong future.
The first most important step to getting out of debt is acknowledging that you have one. Most people tend to ignore the fact that they owe money to others, having them plunge even further into debt trying to cover up their financial struggle. Sit down, take a glass of water and see how your spending has led you into debt. This psychological awareness is very important since it clears your mind of any delusions giving you more focus when creating a strategic plan to get out of this mess. Additionally, it helps prevent you from borrowing more money. Once you've owned up to your mistakes, you are ready to begin the recovery process.
Now that you've cleared your mind, it's time to calculate how much you owe. Gather all bills available to you, including bank statements, and make a list of creditors, how much you owe them, the minimum installments you should pay each month and interest rates if any. The bulk sum enables you to figure how much you need to be saving monthly to repay the debts. Afterwards, set realistic periodic goals on which debts to clear first, and how long it will take you to clear them. Most finance gurus advice paying off larger, nearly/past due and high-interest debts first. This is simply because leaving them unattended causes them to grow into unbearable amounts.
Once you've started clearing your debts the most crucial step comes, stop increasing them. This may prove to be hard, particularly if you've been accustomed to a certain type of lifestyle. However, compromise is necessary. You'll first need to take a record of how much you spend and what you spend it on. After that's done, filter out the luxurious items you don't need and remain only with the necessities. Creating a budget to effectively monitor your spending will give you perspective. For instance, if you're a family that spends much on gas because of many vehicles, start car-pooling.
However, even with a budget, you still need to have some techniques when doing your shopping. Learn to monitor sale seasons and take advantage of discounts when they come by. Buying in bulk also saves more money than going on numerous shopping sprees. Most importantly, cut back on using the credit cards! Not only do they make you do impulse buys, they also don't give you the feel of using hard-earned cash which is sure to make your overspend. Use cash during shopping as much as you can, it gives you an increased sense of awareness. Preferably use a fixed amount for each week, as this can reduce the chance of overspending (try budgeting the groceries of each week). Also, getting a secondary source of income can prove to be useful in aggressively paying off your debts. Nevertheless, make sure the extra job comfortably fits your schedule and doesn't tire you out.
This all goes without mentioning that you need to also save up some money for emergencies. Such a fund helps you create a cushion between you and your debt. In case of an emergency for which you lack money in the bank, you can use the emergency-fund instead of borrowing even more money. You can include the emergency fund in your budget to see how much money you can save monthly. It is however important for you not to occasionally withdraw the money for flimsy reasons.
Conclusively, escaping debt is surely a possibility. You need to set your mind to the task, acquire a high level of financial discipline and never give up. Occasionally seeking the advice of a credit counselor is surely a plus if you feel the need to borrow more money. Additionally, diligently paying your monthly installments (above the minimum limit if you can) can convince the lender to waive some interest. All in all, I wish you luck in your financial recovery and hope the above steps help you in the process.