Debt can creep up on you so slowly that before you realize it you have taken on much more than you can handle. If you discover that you don’t have any money left for savings at the end of the month, or worse, that you are dipping into savings or depending on your credit card just to get you through to the next payday then you probably have too much debt. The good news is you don’t have to be stuck in this uncomfortable position. You can take a look at the tips listed below and make them work for you.
1. Stop Using Credit Cards
One of the easiest ways to maintain your standard of living even though your money is running low is to whip out a credit card. These cards can be convenient for keeping track of spending and they could even work to your advantage if they are used properly, but if you are relying on them when you are vulnerable to pay for items because you have spent your monthly income you are better off using only cash.
Credit card balances should be paid off in full when they fall due to avoid paying extremely high interest rates. If you are in debt though, chances are your balance will continue to accumulate interest and serve to worsen your situation.
2. Don’t Take on Any More Debt
This might sound like a no-brainer, but relying on a credit card is a form of taking on more debt. Some people actually try to take out home equity loans or other lines of credit when they are in a situation of low liquidity without thinking about what this will do to their overall debt.
It is much better to find ways to sacrifice and work towards paying off your existing debt without adding to the problem.
3. Stay Away from Temptation
If you tend to gravitate to the mall when you are feeling bored, or if you need a little pick-me-up, try to break this habit. Walking through the mall only makes the urge to indulge in a little retail therapy more enticing. This is hardly what you need.
To get out of debt you need to take a look at your income and your spending and find ways to cut back where you can. You may be able to stop spending on smaller items and divert the cash to paying off a loan. Eventually you will not have that installment and the money can then go on to pay off another loan. This approach is called the snowball effect.
5. Find Ways to Make More Money
Of course, you can also look at your income side. If you make more money it means that you have more to divide amongst your debts. This only works if you manage not to increase your spending along with your income and instead really focus on getting rid of debt.
6. Start Paying Off Debt
Finally, making a commitment to bringing down your loan balances is also important. If you can make automatic deductions to send money to your loan accounts you can be sure that you don’t miss an opportunity to make an additional payment.