Everyone enjoys spending money. Unfortunately not many are particularly good at following a budget to keep their finances in good order. The level of credit card debt in the USA suggests that there are plenty of people spending on a regular basis without actually paying off the bill in full. Once a balance is established it incurs a high level of interest. Interest is added at the end of each month so something that might be a bargain purchase bought on credit might ultimately end up being very costly indeed.
The recession resulted in an increase in consumer debt. The wise have paid off their debts as a matter of priority. Now it’s your turn. If you write down your regular income and expenditure it will put your financial position down in front of you. Your credit card debt and any debt on store cards will be costing you a significant amount of interest each month.
Credit Card Discipline
Before anything else you should make a decision to stop using your credit card; you are obviously living beyond your means. If at a later date when you have reduced the balance to zero you should only use your card again for convenience and if you can pay the full bill when requested. In an absolute emergency you can use the card but you must understand the consequences of doing that. Don’t even carry it with you perhaps?
The figures in front of you tell your story. The expensive debt should be cleared as a priority. There are online lenders who will look sympathetically at applicants who can prove they have a regular income and can afford the instalment payments each month until the borrowings are paid off completely. Certainly the interest applied to such realistic loans is at a much lower rate than that used by credit card companies.
The Cost of Debt
You need to understand your debt and what it is costing you. Some people psychologically address the smaller amounts first; instead of 6 creditors they are happy to reduce it to 5 and 4, in other words numerically rather than by interest rate. There is some validity in that approach if it increases satisfaction but also determination. If the consolidation loan described above can clear all debts other than mortgage which is in an altogether different category then all well and good.
There are occasions when you can negotiate rates. If a creditors feels you are liable to default he or she make accept some form of negotiation. If that is a means of reducing your core debt then that is certainly worth the approach.
You may be thinking this has all the signs of major sacrifice. No one is claiming that there is np pain in clearing your debts but you must ask yourself a question. If you are earning a regular monthly income why is it that you are facing financial stress every day? The answer may be a combination of things ranging from misfortune to complacency and simple extravagance, living beyond your means. The reality is that unless you address the problem things will only get worse. Debt simply does not vanish and the day will come when you will be completely out of your depth with little or no escape route.
You show investigate whether you can spend less by getting more competitive insurance quotes and utility providers. It is easy just to continue with existing contracts but often there are cheaper options available. It seems a fairly common practice to produce special offers to attract new business without offering those deals to existing clients. If you are financial trouble you should not dismiss trying to get yourself better deals. The only cost is your time.
Perhaps you will need to make some economies in your day to day life; reducing your social budget may be a necessity? If your debts are growing there will be little choice. The days when you might recall how you enjoyed spending money can recede very quickly when the reality of your finances hit home. Discipline must replace any form of complacency. If you have a regular job, you can repair your financial situation but the longer you leave it the more difficult it will be.