There are only two types of people in this world: those who are in debt, and those who haven’t been born yet. It’s natural to assume that financial debt is a bad thing because the idea of owing money is often stigmatized. But the truth is that debt is a natural part of life in the 21st century. In fact, it’s impossible to achieve social mobility or acquire any assets of any real value in life today without taking advantage of loans or credit. For example, if you want an education, you’ll probably have to take out a student loan to pay for a degree. If you want to buy a car or a house, you’ll have to sign up for a note or a mortgage before you can own any of these properties outright. In this sense, debt is directly instrumental to the quality of life that every member of society enjoys.
Things can Get Real:
When managed responsibly, debt actually enables everyday people to gain access to transformative and essential resources in life. Unfortunately, not everybody has a gleaming success story about how credit has impacted their prosperity. Sometimes it’s because of negligent borrowing, and sometimes it’s because sudden emergencies create the need for unexpected spending, but the truth is that there are scores of people in society today who feel crushed under the weight of unpaid bills and past-due notices. No matter how desperate you might feel about your situation however, don’t give up if you happen to be in debt. It takes time, and it takes discipline, but it’s still possible to regain good standing financially if you’re willing to makes a few tough decisions about your financial habits. Here are seven things to do in order to reduce and repay mounting debt:
1. Learn to Distinguish Between Wants and Needs:
Spending money on things you don’t need is the quickest way to burden yourself with mushrooming credit balances. If a spending decision won’t have any impact on your health and well-being, pause to evaluate whether you can actually do without it, and don’t be afraid to say “no” if it’s not something you need.
2. Pay Attention to Your Spending:
The first step to financial literacy is deciding to be proactive about analyzing and recording your spending habits. At least once a month, you should makes sure to file and study your bank statements and receipts to gain a better understanding of how cash flows through your hands. If you notice any heavy or unusual spending, do something about it.
3. Go High-Tech:
There’s no need to let your budgeting get inundated by piles of paperwork and hardcopy receipts. Designing a spreadsheet to keep track of your personal spending can speed things up and help you get organized in an efficient way. It also allows you to keep extensive records without having to use bulky folders or stationery.
4. Prioritize Your Outstanding Debt:
Not all debt is created equal. If you happen to owe money to multiple different parties, it’s a good idea to rank which of your debtors can inflict serious consequences on your daily life and pay them off first. As a general rule, it’s usually a good idea to pay back debt based on the following sequence:
· If you owe money to the IRS, pay them before you pay anyone else. They have the ability to jail you for defaulting on your debt.
· If you we student loans, pay them with extreme urgency because the government also has the power to garnish your wages if you default.
· If you owe any personal loans, pay them after considering government debts because personal loans directly influence how much your friends and family trust you.
· If you have a mortgage, prioritize it after considering personal loans because defaulting on a mortgage can leave you homeless.
· If you have a car note, prioritize it after mortgage debt because vehicles are essential for travel, but they can easily be replaced by public transportations.
5. Go Above and Beyond the Bare Minimum:
Paying back debt has nothing to do with meeting minimum payments, and everything to do with clearing an outstanding balance in its entirety. If you choose to pay back a loan strictly through the minimum payments that are due, you’ll end up paying too much cash on interest charges, and you’ll also end up paying back small debts for years and years. Nobody’s saying you have to pay back everything at one go, but every now and then, pay back more than the minimum balance due.
Trying to figure out how to eliminate debt can feel overwhelming. But it’s not impossible. You just have to be willing to reevaluate your spending and actually do something to change your financial habits. The more organized you become, the better decisions you’ll ultimately make about your money. If you like what you just read from our blog, you’ll love the various informative workshops and events listed on our website and social media. Whether you’re interested in personal development, or overall improvement of your business, give us a call at 1 (888) 823-7757 to find out how The RISE Programs Academy for Business Coaching and Leadership Training can help you break past your daily struggles and start soaring in success.