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Coming Out of Bad Spending Habits – Avoid Debt Pitfalls
Dec 19th
Credit cards have given us the ease of spending money. However, we have used these cards and the ease they provide have led many of us to abuse these cards also. Credit card debts have left many people struggling with their finances.
While some people have fallen into the vicious circle of credit card debts due to some medical emergency or some other emergency such as job loss, most people fall into these debts simply owing to their bad spending habits.
Credit cards have given people easy money and people have misused this ease. People have started living the life of their future, right now. The system of buy now and pay later has caused people to fall into a trap of thinking that everything is going to get paid by itself. This has led people to live beyond their means.
Most often, coming out of such debts is a simple matter of breaking free of some bad spending habits. So, how do you do it? Well, here are some tips on how you can break these habits.
Take a time-out
When you feel that you simply have to buy something, then take a break for some time. You can even put that thing on hold at the counter and then take at least 24 hours or more to think about it. Then think if you really need that item; most often, you will find out that you do not really want that anyway. For something else such as clothes you can put it on a ten minute hold. Then, walk away and get yourself a drink or something and then decide if the purchase is an impulsive one or not.
Set a goal
Without a goal, you will be lost. Therefore, you will need to decide the time period in which you want to decrease your debt. Besides that, set a realistic goal as to the amount that you will pay each month. Apart from that, include savings as well as vacations in these goals.
Cancel your unnecessary cards
Most often, you will not need more than two cards. In fact, most people can do with only a single card. However, in case you are into traveling then you might need two depending upon which ones are more accepted.
Do not go beyond your limit and lower it
You do not have to go for the maximum limit that your creditor is offering. You can choose the limit that you feel comfortable with. Inform your creditor in writing about the limit of your choice. This way you do not go beyond your budget.
Consider consolidation
If you are already deep in multiple credit card debts then it is a difficult scenario for your financial position. Therefore, you can first think about how you can reduce that and one sure way of doing it is through debt consolidation. Talk with the debt counselor and discuss if that is a good idea as per your current condition.
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How to Avoid Debt
Dec 18th
You might have read several books and articles about how you can get out of debt. However, prevention is always better than the cure. Hence, it is better to stay out of debt than to get into debt and then wonder how to get out of it. Here are a few very common things that you can do to stay out of debt.
First, you need to understand the role that personal finance plays in a successful life. If you are not able to manage your finances then it will be difficult to do pretty much anything.
You will find that not many high schools teach their students about how to handle their finances in spite of the fact that credit card companies send them cards as soon as they graduate. I believe the lack of understanding to manage your finances is a key factor in causing you to land in debts.
Secondly, you need to understand the principle of saving instead of borrowing. People have grown used to using credit cards when they want something and pretty soon all of this goes out of hand and you realise that those extra trousers, or that holiday has landed you in a deep debt.
If you want to enjoy something then save for it first and then, you can enjoy it fully. It is easier to borrow than to save. Saving will require discipline as well as time. However, you will not regret your holiday if you have saved for it.
Third, is to beware of being enchanted and entrapped by the methods of advertising. The advertising industry feeds you daily with thousands upon thousands of images that convince you that you do not have so many things or that you need all of those things. While you could some of those, you certainly do not need most of them.
Hence, learn to make the right decision. A good way is to let the matter rest for a while before making a purchase. Time will allow you to make a good decision.
Finally, make wise choices about where you make your purchases from. There are several options to any goods and if you will look harder, you will easily find the cheaper option. For example, you will certainly find some good deals at some thrift store compared to a mall.
Simply because everybody uses a credit card when they need something or takes a loan when they spot something they desire, does not mean that you need to do the same thing. You do not have to follow the crowd in this. You should do it as it seems best for your financial future and not as the others are doing.
In conclusion, being and staying debt free is more of a lifestyle choice than anything else. It is all about making the right choices. With time, however, you do realise that these healthy financial choices give you the freedom of being debt free.
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Debt Consolidation – Profit Or Non-Profit?
Dec 16th
You will find debt counselors and debt counseling agencies advertising just about everywhere that they are there for you and are always ready to help. In fact, that is the latest big thing in the financial industry these days owing to the huge number of people struggling with bad credit.
However, all that help and advice and good support is yours only if you are ready to pay them. Yes, that is true. Most of these debt consolidation and counseling companies are in this business, not to help you, but to help themselves first.
Here is how these companies operate.
First, an expert from the company will evaluate and analyze your present financial situation. They will consider things such as your credit rating, history, present debt size as well as your income.
After you have signed a deal with them, they will negotiate with the lenders on behalf of you. They will negotiate to reduce your rate of interest, waive your penalties, late fees or any extra charges.
Then you have to pay the company every month so that they will pay off your creditors.
Now, you will continue to receive monthly statements for your credit cards. Therefore, you should carefully check them so that you can be sure that your consolidation company is paying your creditors correctly.
Most often, a certain percent, usually ten per cent of your monthly payment goes towards paying the consolidation company. Nevertheless, it is different for different companies.
Now, you might ask yourself if you really have any choice or options. When your bills are accumulating and your income does not seem to be rising, it is only normal to feel overwhelmed and helpless.
While your situation might seem to be dire with no other option but debt consolidation, you do have options and choices. Do not let any words of that salesperson make you believe any different.
There are several non profit debt counseling companies. Their only purpose is helping people struggling with financial issues. While they work on the same basic principles, a few big differences can be seen.
They will evaluate and analyze your present financial situation and they will give you useful suggestions as to how you can make useful lifestyle changes. Besides that, they will also create a customized budget with you so that you can structure your financial life according to it.
These options are open to you and you do not “have” to choose any option. It is completely your decision. Do not let anyone talk you into making any particular decision. Educate yourself with enough information and make an informed choice.
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