7 Tips that will help you survive overwhelming debts

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Below are 7 Tips that will help you survive overwhelming debts
2 years ago
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1. Avoid Using Debt Altogether

Debt is a product of banks, credit card companies, and other financing institutions for profit. You should use debts moderately or not at all. Don't use debt if you can avoid it. To avoid getting into debt altogether, come up with a ?úsinking fund?? This is the money you save for the sole purpose of paying your future expenses. If you're not weighted down by a ton of debt right now, it can be easy to save up. You just need to develop the habit of depositing a certain amount of money to your bank every month. You'll definitely be surprised by the amount in the ?úsinking fund??in just a short time.

2. Use Delayed Gratification

Today's culture can be described as a ?úfast food culture?? Everyone wants everything in an instant. It is not surprising that there are a lot of impulse buyers in the country. You should start realizing the value of patience. Wait. If you have a strong urge to buy something because ?úI wouldn't be able to sleep??or ?úI'll regret it??if I don't, stop this mindset. Delay your gratification until tomorrow or the next day. That will put the whole thing into perspective. Also, delaying the gratification is a very mature thing. It implies that you're in control of yourself. And that you won't listen to the inner child who wants to throw tantrums when things don't go his way. Bright and sparkling new items usually end up in the junk closet anyway. Remember that when you go to the mall or any other retail store.

3. Give Every Dollar a Purpose

If you're struggling, use the zero-based spending plan. That is, you assign a purpose for every dollar you earn on paper every month. Set aside the dollars for expenses, some for emergencies, and some for giving. The extra money can go to paying for movies, grocery, children's allowances, and other out-of-pocket expenses. This type of spending plan should be accurate and thorough in order to be effective. Always write everything down so you have something to look back on when you need to spend money.

4. Plan for Emergencies

As was mentioned earlier, it is important to set aside some funds for emergencies. A typical family will experience some sort of emergency at one time or other every 9-12 months. Usually, the expense involved in these situations is less than $1,000. However, there are also cases when it can cost more than $3,000. Start saving $1,000 a month. Remember to spend this fund only for emergencies. Buying for clothes and shoes during a mall sale is not an emergency. But a car breaking down in the middle of a highly is something you can treat as an emergency. The emergency fund is particularly useful in these situations. If you don't have it, not only will you need to deal with the emergency with ?úsubpar??help because you can't afford any better, you'll also face money crisis once it is over.

5. Use Priority-Based Spending Plan

This can complement the zero-based spending plan outlined above. Every dollar you assign should be accounted for. However, the spending plan should be based on order of your priorities. For example, the basics such as food, clothing, and housing should be at the top of your list. Transportation should be prioritized as well. It is important to pay for the car loan and mortgage before you pay off the unsecured debts. The last thing you want to do is lose your home.

Remember that collection agents from Visa and MasterCard may become exasperating but they don't have the same power as your mortgage company. Your mortgage company and auto loan company might seem silent, but you wouldn't like it when they take your home and your car.

6. Give, Save, and Spend

Smart people know when to give, when to save, and when to spend. Put giving and saving at the top of your plan. You should also know how to reward yourself and give to people in need. Take baby steps and make this a daily habit. Pretty soon, you'll live in financial abundance and feel good about yourself. The secret to accumulating wealth is not being selfish. It is about knowing when to give and when to cut back.

7. Use the Power of Cash

Today's society is using too much plastic for so long that a lot of many don't even know what real cash feels like anymore. What many don't realize is that the small piece of plastic has a much higher price underneath the surface. If you want to get out of debt, go back to using cash. It might feel a little weird at first especially if you've been using credit cards for everything since your teens. But the benefits of using cash cannot be denied.

Take note that even using your debit card can land you into trouble. For example, a lot of people have bounced their checks simply because they forgot they used the card to buy something. Bounced checks are costly and unnecessary. By using cash, you're saving yourself a world of trouble.

If you're tired of living in debt and feeling its consequences every day, adopt a new mindset. Free yourself from debt, bankruptcy, poverty, and personal disaster. A little vigilance can go a long way. And if you persevere, a debt-free existence and personal freedom is definitely possible.

Remember that rich people use cash while poor people use credit. The next section deals with making interest rates work for you.

by Katie Ann
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