If you are struggling with debt then you have to make a commitment to change the way you spend your money. There are many places you can turn for help, such as financial advisors, and there are many ways to help turn your finances around with programs involving debt management, refinancing, or even debt consolidation.
With that said, no matter what options you choose you need to commit to saying no to any more debt. No matter how tempting it may be to spend, if you want to get out debt you have to stop adding to it.
It is true that it can be hard not to take on new debt, especially if you are used to using your credit cards and are living paycheck to paycheck. To get started here are a few suggestions to help you change your habits.
Avoid New Loans
When you are having trouble paying bills, it can be very tempting to seek out a new loan in order to cushion yourself and have a sense of security. However, you are much better off reducing your expenses in other ways and creating a monthly budget. This can show you how easy it can be to save money and allow you to learn how to live within your means.
When you can teach yourself to start using cash for all of your expenses, you will begin to realize just how much of a crutch your credit card and loans have been. If you have a lot of debt and cannot afford to buy something in full using cash, then you should not be allowing yourself to buy it.
Breaking Bad Habits
It is very important to allow yourself to put paying off debt before anything else. By avoiding loans and only spending the money that you have in your account you will be able to break away from your spending habits and stand up to your finances.
Another great way to learn new habits is to start paying yourself before you turn to other expenses. You can do this by setting up a deposit into your savings account on the first of the month. When you start to see this money disappearing each month you will begin to treat it like any other payment, and even forget that you are actually saving money. This is one of the best habits to get into and is a great way to save for an emergency or start to build up a nest egg.
Even if you set up a withdrawal that puts $50 a month into your savings you will have at least $600 in an emergency fund at the end of the year. While that may not seem worth it right now, it can be the difference between bankruptcy and making it through any difficult times. Something as simple as avoiding buying a cup of coffee each day can allow you to pay yourself first, and is more than worth it in the long run.
Reducing Toxic Debt
Aside from putting away a bit of money, you should always do your best to target toxic debt with any extra money you have from your budget. Toxic debt refers to the high interest payments that you have in terms of credit card balances or pay advance loans. You should always being focusing on paying off this kind of debt first before upping your payments on things such as student loans or car payments. Tackle the worst debts first and then you will be in better shape to slowly pay off other debt such as your mortgage.
The fact is that most of us have more money than we think we do, we are just guilty of impulse buys and not having our priorities straight. By teaching yourself to spend in cash, avoid loans, pay yourself first, and attacking toxic debt, you can form all new habits and in many instances find out just how much extra cash you will eventually have lying around at the end of each month.
Be smart, stick to your guns, and that dream retirement or debt-free future could be closer than you think.