5 Things To Avoid When You’re In Debt
What not to do when you’re in debt.
Finding yourself in debt is one of the most stressful situations anyone can be in. Sleep can be rare and life can be a nightmare when you owe more money than you can afford to repay. Debt is a massive burden on you and your family.
There’s loads of advice out there about what you should do when you’re in debt, but nobody ever tells you what not to do.
Well, here are 5 things to avoid when you’re in debt.
Pretend It is Not Happening
There is no better way to make your debt worse than by ignoring it or pretending it is not happening.
In some cases, getting back on track may as simple as slightly adjusting your lifestyle. For example, it could be that you’re spending a little more than you earn each month or that the repayment dates for your loans are not at the right time of month.
Regardless, you’re not going to be able to dig yourself out of debt without acknowledging it and taking action. It is important to take control of your finances and figure out how you’re going to fix the situation. No one else is going to do it for you.
Keep Paying the Minimum Amount on Your Credit Card Each Month
Having credit card debt is a common problem. Most people think they can simply pay the minimum amount each month without a worry. If you’re doing this you’re thinking that one day you’ll be able to come up with enough money to pay off the whole balance.
This is not a wise decision. If you’re only paying the minimum repayment on your credit card then you’re only paying the interest. The capital amount is not changing, so it is costing you considerably more in the long run.
Keep Borrowing From Friends
At a time when more and more people are finding themselves in financial difficulty, there comes a point when asking for a loan may become necessary in order to stay afloat.
When you’re in debt, it can be reassuring to have friends and family members to borrow from.
However, you should avoid doing so, because unlike asking a bank to lend you money, friends typically are in similar economic situations. Therefore, the amount asked for will likely be a considerable burden on the person being asked.
The weight that money has in today’s society fundamentally makes its exchange troubling.
While you may think that the bonds of your friendships are strong enough to withstand a simple financial transaction, they are actually not equipped to carry the emotional baggage connected to money.
Continue The Habits That Got You Into Debt
Today’s culture is fueled by credit. Stacking on debt has been habit-forming.
Try not to buy anything on credit. If you don’t have the money in your bank account, then don’t buy it. Unless you can pay off your credit card balance in full each month, then don’t use it.
Also to avoid expensive things. Skip the fancy restaurants, expensive clothes, and 5-star resorts and opt for cheaper alternatives.
If you’re in debt, you obviously need to make a change when it comes to your spending habits. Budgeting is really important. You can make an adequate income but if you don’t have a plan for spending, you can find yourself in financial trouble.
Take control of the situation and make the change. Take a look at my post about Good Habits For Building Wealth.
Go Cold Turkey
So you’re deciding to reform and be diligent with your finances. This is brilliant, but how are you going to do it?
A complete change of lifestyle can work for some, but it is important to be careful that going cold turkey won’t affect your spending habits. By this, I mean that if you’re accustomed to a certain lifestyle, a sudden overhaul can be a shock to the system.
Just like in crash diets, sometimes you can snap and find yourself on a two-day binge. This is not good for your bank account.
If you need to make a change, try cutting your expenses gradually. Cross one thing out each month. Getting used to living with less over time can be easier than everything at once.
When you’re in debt, there are many things you can do to resolve the problem.
If you’re not sure where to start and you need help, click here for your free savings estimate.