Anyone who has found themselves deeply in debt will know the massive pressure that owing large amounts of money can inflict. Trying to find a way out from those debts can seem like an impossible task and often results in people giving up, burying their heads in the sand and getting themselves in even worse trouble as the debts accumulate further. However, no matter how bad things are it is possible to make a change to your life and start bringing those debts down immediately. As long as you are prepared to make significant changes to the way you live and the way you manage your money, you can free yourself of those debts and start living a carefree life again. This article will show you a few ways you can do precisely that:
(1) Evaluate and Decide to Change How You Live – At first glance this statement might seem a bit excessive. Do you really need to change how you live just to sort your debts out? Unfortunately in most cases the answer is yes. You wont have to change every single thing – just those things that require money. Make no mistake, if you are in serious debt then you will need to take serious action by changing the way that you interact with money.
(2) Change How You Handle Debt – The first step you must take is to decide that there will be no more borrowing money until you have done some serious research and planning. No more borrowing on credit cards and absolutely no making use of payday loans, regardless of how bad things have got. These kinds of short term fixes will only get you into a whole heap more trouble. And if you have any of those outstanding, pay them off first. Short fixes might seem like they are helping you but they are only making your situation worse. Resolve from this moment onwards never to use this kind of credit again.
(3) Organize Your Day-to-Day Living and Expenditure – The days when you could spend money without a second thought are long gone, as are the days when financial institutions would hand out more credit like candy. The party is over and prudence is the name of the game from now on. You’ll need to carefully consider every single outgoing item and every single cash withdrawal. All expenditure must be planned and accounted for and the best way to do this will be to live according to a pre-set budget that lays out the spending for the month. Take a day or two to plan this out by totaling up every bill that must be paid every month, how much needs to be found for shopping, travel and other assorted expenses and then on top of that, how much you need to find to pay down those debts every month. Once you have done that, compare the final figure with your monthly salary and work out firstly if you have enough and then secondly, what adjustments you might need to make to your outgoings if you fall short. The most important thing is to clear those debts so look at your outgoings and work out where to make the changes if necessary:
(4) Make Changes to How You Shop – The first thing to go is any shopping that is unplanned. The spending plan you have put in place must be stuck to religiously and you need to get into a routine of researching all the shopping you buy each week, every service you use and any financial package or agreement you sign on to. More importantly, it’s time to have a break from fancy living so no branded clothes or designer suits, no luxury foods or expensive bottles of wine and no new audio-visual equipment until all those debts are gone. If you don’t need it, you can’t buy it!
(5) Get Used to Cash – It’s time to start using cash all the time. That way you can get out the required amount of cash for whatever you need and no more. Credit cards are too dangerous and too tempting so the best thing to do is tear them all up (or perhaps keep one at the back of your bedroom drawer in case of emergency).
(6) Lastly, Don’t Panic – No matter how bad things get there are always things you can do, from phoning the people you owe money to and negotiating a repayment schedule to talking to debt management services and debt helplines.
About the Author: Esther is a small business blogger based in Chicago. She writes about all areas affecting small business from entrepreneurship to tax relief and from invoicing to accounts receivable loans.