Debt robs a person of emotional and mental freedom. We all know how heavy a financial burden is to one's well-being. Money should not be the sole focus in the life of a person, by to someone in debt, it is seen as the only solution. Not only does it affect health (brought about by severe anxiety, sleepless nights, high blood pressure due to tension), one's self-esteem, trust and reputation are tarnished. Money is good, if we handle it responsibly. But money which is not yet in your hands but is spent carelessly can be the cause of a possible jail term, loss of one's good credit rating, and trouble within the family.
If you are currently under a pile of debt, what are the easiest ways to get out of it? Or if you are just planning in signing that loan agreement, how must you alter your spending habits to ensure that you do not end up down, desperate and drowning in the future?
Here are the top three ways to do it:
Reduce unnecessary spending. Okay, you got that loan for a reason - you must have, did you not? You probably planned on using it to start a small business, or to buy a new home for your family, or to purchase your friend's almost-new car to replace your old, beat-up and problematic one. So if these are the reasons why you availed of a loan, then make sure you use it for this purpose! Why? Because these legitimate expenses make the entire paying up worthwhile. Imagine availing of a housing loan, and wondering (after it's all spent) where the money went? This type of problem sends some people off the cliff.
Discipline is the key. You have to make concessions and sacrifices to pay your amortizations religiously. If you go on a weekly shopping spree prior to your loan, then either stop it completely or reduce the frequency of the shopping trips drastically. What is the logic behind this? Every little bit of money you can save will help in paying off your debt. Also, by continually spending and spending, your other debts mount up, thus leaving less and less money for the religious payment of your amortizations. Always have this in mind - to reduce debt, you must STOP incurring more debt. Sacrifice and restraint are key.
Stop using those credit cards! Or maybe even better - if you have 5 credit cards, you must cut up 4 of them, and consolidate all spending into just one credit card bill. Credit card companies are businesses. This means that for every time you use that plastic money, they will earn from your use. And the more you use a credit card, the more the credit card company racks up in interest - thus making your credit purchase more expensive than it already is. Be wary also of installment schemes on credit cards. They are not made to make your life easier, they were created to spread out and accumulate even more interest from you. The longer it takes for you to pay the entire amount, the more interest you pay. And if you fail even just once on your monthly payment, notice an immediate penalty on your next bill? That's another way they earn. Also never make the mistake of taking out a loan from one credit card to pay for the bill of another credit card! Where does that take you? Probably in debt oblivion. - drowning and totally overwhelmed.
The next time you are tempted to pay for purchases on credit, try to imagine how infinitely freer your life will be, had you not had that pesky credit bill to constantly drain your pay check - long before you actually earn it. If you must use your credit card, remember this tip: Always pay for your monthly bill in full. This means that you start each month on a clean slate. Never spend more than you earn. It's always a great feeling to be liquid, so instead of using a credit card, use a debit card instead.
This way, you never spend more than you can afford. Just reserve that credit limit for emergencies, or for things you really absolutely need to buy on an installment basis. Among these emergencies are hospital and medical bills, and funeral expenses (morbid, but a fact of life).
Work out a restructuring of your loan or credit card balance with your bank. When you are trying hard to keep up with the payments but still find it almost impossible to pay everything at the existing payment scheme of your various obligations, then it is always the best option to request for a restructuring of your debts. Debt restructuring means adjusting your amortizations and payment schedule according to your ability to pay. If there are already debt collectors hounding you at your doorstep, and threatening to have the sheriff cart you off, then stop pretending that you can "still work things out." Praying to the heavens that you win that game of lottery to pay off your bills in not a reliable (nor realistic) option. Just be honest with your bank and request for a re-do of your payment options. If you can afford to pay only $300 a month, then the bank can work out a scheme so that you pay only $300. There's no sense in stressing too much when there are ways to make your life easier. Don't be embarrassed to ask the bank for this debt restructuring - it's much better than not being able to pay at all.
So if you are currently problematic, fret not and don't feel hopeless - there are ways to regain your financial freedom. All you need is discipline and better planning. Just learn from the lessons life HAD to teach you.
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Michael Griffiths is the CEO and Founder of Secrets Of A Super Life, providing individuals with personal development strategies to increase their purpose, passion, happiness and life fulfilment. For your free life success pack please visit http://www.mysuperlifetoday.com
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