Struggling With Debt: Tips to Become Debt-Free
Nearly two-thirds of the American workforce lives life paycheck to paycheck, only steps away from certain poverty. It’s a sad reality further enhanced by the pandemic. A loss of income, a sickness, or poor money management, are a few of the reasons this occurs. Fortunately, regardless of your current financial status, you can become debt-free.
Changing Your View of Money
Money is something you need to live. You need a roof over your head, food on the table and transportation to work. Where many people go wrong is when they have money, they spend it recklessly. Instead of keeping some for a rainy day, they spend every penny.
Unfortunately, when you don’t save money, you don’t have it when you need it. Life happens. Things will break and need repair or replacing. Without money in reserve you’ll borrow money to pay for these unexpected expenses. When you change your view of money you make better financial decisions. Gaining control of your money will also eliminate the need for a bankruptcy.
Repaying Debt
Credit card debt is costly. It can take years to clean up just a few thousand owed. If you have several cards at or approaching their credit limit, you’ll also lower your credit score significantly. Paying off credit card debt needs to be at the top of your debt repayment list.
Fortunately, you can start today. Some people use the method of paying off the credit card with the highest balance or the highest interest rate first. If your debt is too much to maintain, applying for a personal loan to consolidate the debt will give you a single fixed monthly payment that’s affordable. Personal loans in general also have a much lower interest rate allowing you to pay down the debt sooner.
Budgeting
The household budget is an essential tool that every person should embrace. You may think that sticking to a budget will prevent you from enjoying a better quality of life. However, quite the opposite is true. A budget identifies all of your expenses, both monthly and those that occur once or twice a year. It also opens your eyes to where your money goes, allowing you to make necessary changes to spending habits. You learn how to stretch each dollar and eliminate waste.
Additionally, a budget lets you enjoy a good quality of life now and in the future, including your retirement years. You track spending, save money, and gain control over your finances reaching desired goals.
Increase Your Net Earnings
Sometimes debt is too much to tackle without more money. If this is the case, increasing your monthly earnings is necessary. This can be done in a number of ways. If you already have a job, then consider adding a second source of income by perhaps starting an online store or a betting operation. There are various online tools like e-commerce shop software and pph sportsbook software that could help you set up and manage your second source of income. Even if you’re able to pay your bills, but want to pay the debt off quicker, bringing in extra money will make it possible.
Go back to school to advance your position in the company or look for a job with the potential for higher earnings. Find a part-time job doing something you like. Many people are taking advantage of the exploding housing market and getting their degree in real estate and learning necessary skills to achieve success.
Emergency Fund
Having money saved reduces the possibility of financial ruin. As this past year demonstrated, living paycheck to paycheck can have a disastrous outcome. An emergency fund is easy to start. Making small deposits of $20 each pay period will add up quickly to several hundred and then a few thousand. When an unexpected expense happens you simply draw the required funds from the bank and go on without a financial setback.
Living life debt-free is possible. Create a household budget and stick to it. Learn to live within your means and create savings for emergencies, large ticket items, and your retirement.
