Fixing the Train Wreck: Addressing Financial Challenges

Debt is something that can sneak up and bite even the cheapest person in the wallet. There are some things that happen that instantly overwhelm everyone except the fabulously wealthy. Those that find themselves in debt often don’t know what to do or how they got into this situation. While it’s surprising and often overwhelming, the painful truth is that it has to be addressed or it will never go away.

Every year thousands of households start their new year with debts they had the previous year. Unfortunately, most of these households will increase their debts through the next years until they decide to stop it. Debt is something that people like to ignore, hoping that it will go away. Debt isn’t something that will disappear because someone refuses to acknowledge it. If fact, some debts GROW when ignored. It’s best to stare the beast in the eye and address it as soon as possible.

How to Address Debt

One of the first things that people need to do to address their debt is assess their debts. This means it’s time to face the ugliness of the situation entirely.

Those that want to address their debts and begin putting their financial lives in order should gather all their debts together and look at them. They should get an understanding of how much debt there is to be paid off. This is a scary moment for many people. This is the moment they will confirm their suspicions on how much debt they are in and that can be more than some people realized.

Once the real amount of debt has been assessed, it’s time to put together a plan to pay it off. Most people are shocked and afraid when they realize how much debt they have to pay off. That is the wrong thing to do.

·         A payoff plan for debt should include:

·         The amount of income the family has each month

·         Obligatory bills (mortgage/rent, utilities, insurance, food, etc.)

·         Individual debts

A family with a debt payment plan is a family that will come out of debt faster.

How to Stay Out of Debt

The feeling that people feel when they pay off their debt is one of immense relief. It’s easy for many to fall back into the same pattern of accumulating debt because they have a lot more spendable money than before. This is something that many should work hard to avoid.

Stay away from credit cards. Credit card debt is one of the easiest ways to fall back into debt. Many feel that because they have to rebuild their credit they have to religiously use credit cards. That isn’t true. While using a credit card can help rebuild credit, the key is to pay the balance off each month on time. Credit cards make it easy to carry growing debt.

Make and keep a budget. Budgeting is something that many people don’t think they have to do once they get out of debt. That is a misconception. When people put a budget in place, they are putting a tracking plan in place. A budget is how many financially independent people track where they spend their money. When people stop tracking where they spend their money, destructive habits begin again.

Think before buying. There are many reasons people spend money and many of those reasons are not because there is a definite need. Before spending money, those that have had trouble with debt should stop and think before they buy anything more than $20. Why are they buying it? What is going on in their life that leads them to the store? Many people that struggle with their finances often find that making a shopping list helps them avoid impulse and emotional shopping sprees.

Uncontrolled debt is the thing of nightmares. Ignoring it only makes it worse and ignoring the habits that brought on the debt compounds the issues. Confronting the debt and changing habits is the only way to escape the nightmare of debt.

Mar. 28 14'
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May. 26 14'

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