How are you managing your debts? Today it seems that there are more people on the verge of bankruptcy than ever. As a matter of fact, a lot of those people have already filed for bankruptcy once in the past and are probably less than two pay cheques away from insolvency again.
Credit Will Not Typically Create Wealth
Credit is too often seen as an easy answer to money problems but more credit will not lead you to becoming debt-free. You can’t typically borrow your way to financial freedom --- especially if you already have debt. True wealth happens when you have more income coming in than you have bills going out and far too many people live beyond their means for them to be able to even fathom the weight that will be lifted when they become debt free. Many won’t become debt free because they don’t think it’s possible.
How long will it take you to become debt free?
A lot of people have never sat down and looked at their finances to the degree that they know what it’ll take and how long it’ll be before they don’t have a mountain of bills. This is part of the problem. If you are managing debts and working to pay them off, you’re going to be much happier and you’re going to be wealthier. Have you ever looked at the % of your income that goes to interest payments?
Most people who take out a consolidation loan don’t use that loan to pay down their debts. They use it to free up more money so they can spend more. They get temporary relief at most because they often get themselves into even more financial trouble.
Most people who get a raise in their income don’t take that extra cash and put it toward paying down debt. Instead, they upgrade their car or their home and start spending more money. For many, debt is a seemingly endless cycle that they don’t see any way out of because living beyond their means is the only way they know how to live without being miserable.
Here are two tips to help you break the cycle of this type of thinking so that you can manage your debts, put money away for emergencies, put money away for retirement, and live with much less stress today. It truly is freeing to be debt free.
Stop buying things on credit. Cut your cards if you need to. Instead of seeing your available credit card balance as available money to spend, look instead at what you still owe and make a goal to pay it off as fast as possible. See your balance owing as your limit and buy things with cash.
Talk to a financial counselor about a debt reduction plan. Whether you need to do an informal agreement to take charge of your finances or find another way to get out of debt sooner, someone experienced in this area can give you solid advice.
Managing debts can mean you’re living hand to mouth or managing debts can mean that you’re on your way to being debt free. It takes effort and sacrifice to pay the debts off but the end results are more than worth the effort!
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