We all fall into some kind of financial pickle at some point in our lives, and taking out a loan to alleviate our struggle isn’t actually the worst idea. Sometimes, especially in life and death situations, your only option is to borrow money from the bank, or from an individual like a friend or family member. There’s nothing wrong with the idea of borrowing money, but it does start to become a problem if you are unable to pay your debt. If you find yourself up to your neck in debt, here are a few simple ways to get you back in the green.
Pay With Cash
Spend the money you earn, but no more than what you have. When you do your groceries, always pay with cash instead of using your credit card. Make an estimate of how much what you intend to buy costs, and bring just enough money to cover the expense, and then some. Not using your credit card keeps you from getting buried deeper in debt.
Never Max Out Your Cards
Using your credit card to its limit just isn’t a good idea, especially if your trying to dig yourself out of a huge financial hole. If you can’t pay for something with good old cash, then you can’t afford it. The only time you pull out your credit card is during emergencies, and you need to make sure you are able to settle your credit card bills on time.
Make a List
Sticking to your shopping list not only makes you a smart shopper, but it also keeps you from spending too much or falling into more debt by using your credit cards. Creating a list and adhering to it makes it easy for you to organize your purchases, letting you identify expenses that you need and those you can live without.
Plan Your Budget
A change of lifestyle can do wonders for your financial situation. Cut costs by spending less, and making a conscious effort to adhere to your budget. Also, be sure to make your budget plan realistic. Otherwise, you risk making your budget plan extremely difficult to follow. You don’t have to give up everything, but you do need to make a few sacrifices here and there in order to pull yourself up out of debt.
List Down Your Payables
The first step to being able to pay back all of your debt is knowing who you owe money to and exactly how much money you owe. Make a list of all of your debts, whether they be personal loans, bank loans, or your credit card bills, and be sure to consider any interests and fees that apply to your situation.
Follow a Payment Schedule
After you’ve identified who you need to pay back and how much money you owe, it’s time to actually start making payments. Of course, short of winning the lottery, paying back everything you owe with a single cheque is impossible; hence, the need for a schedule. There are a thousand different ways to go about this, but ideally, you would want to settle high-priority debts first. On the other hand, you can also choose to pay back those loans that you can actually afford right now first. Alternatively, you can also choose to pay back loans that have the highest interest rates in order to prevent them from becoming even more difficult to pay back. However way you choose to go about it, it is important that you make an organized account of all the debts you have settled and those that are still unaccounted for.
Also, try not to borrow more money in your effort to pay off all your debt. Doing so can help sometimes, but try to make it your when-all-else-fails option as much as possible. Remember that pulling yourself out of debt takes a considerable amount of effort and sacrifice. But it will all be worth it once you’re back on your feet again and you realize that you’ve taken back your financial freedom.