Money seems to leave our lives faster than it comes into it. If you are someone that lives paycheck-to-paycheck, then you will understand the feeling of constantly trying to balance your precarious finances. Often it may feel that you are one slip away from complete financial failure.
Bankruptcy is no joke. It can lead to you having items repossessed, you losing your home, and significantly, it can be a major contributing factor in stress, depression, and anxiety in your life.
While we may all have the best intentions in the world of keeping on top of our finances, it is not uncommon to feel as though you are trapped between a rock and a hard place. It is particularly challenging when you own multiple different organizations’ money. You may find that you are fighting too many fires, and when your back is turned trying to keep one debt under control, another becomes more of a problem.
It is possible, however, to improve your financial situation and get yourself back on track. It can take some time to do this, and it will involve a great deal of commitment and facing some harsh realizations on your part, but a debt-free life is completely attainable within a few years.
Facing Up To The Problem
The first thing that you really need to do in terms of getting your finances under control is to admit to yourself that they are not in a state that you can continue to manage the way that you are.
Whether you have resigned yourself to a life of perpetual debt, or you believe that the problem will go away on its own, you need to shift your mindset.
Admit that you have handled your finances badly and that you need to make pro-active changes and become more organized. You should also consider the fact that the problem may be bigger than you can deal with, and that you speak with debt charities such as Step Change, or Debt.org for advice.
Prioritizing And Consolidating Your Debts
If you have multiple debts with several different companies, then you will be paying varying different rates of interest over different periods of time.
If you are only making your minimum payment on all of your debts, then some of them will never be clear. High-interest rates on debts such as payday loans and credit cards mean than the minimum payment often only covers the most recent chunk of interest. You will need to pay off these debts in chunks.
It is often hard to know which debts to prioritize. You may feel inclined to try and tackle the biggest debts, but they may not always be your biggest problems. Instead, go for your high-interest debts first. The higher the interest, the more chance it has of increasing your overall debt very rapidly.
If you are able to shift your credit cards to new zero-interest balance transfer cards, do this. But the moment you get your card and have moved your debt, you need to quickly start paying it off. Eventually, the interest will kick back in, and you will need to have cleared that debt before then.
Debt consolidation is a good idea. This is a great idea if you have multiple debts from lots of different sources. Medical Debt Consolidation is something that may be needed if you have had lots of healthcare issues that have left you in debt.
By moving all of your debts into one single loan, you will be able to better manage the repayments. You will have a final end-date for your loan to be completely clear by, and you will have a simple interest rate that should not be as high as your previous highest interest debts.
Budgeting Your Life
Many financial problems stem from not keeping a tight enough control over your spending, or from living beyond your means. Knowing what you have coming in and out is vital if you want to become debt-free.
Set up a spreadsheet and start tracking all of your spending and income. Get in the habit of filling in the sheet daily. Use something like Google Sheets so that you can access the document on any device to make it easier for yourself.
You will need to start setting yourself spending limits and stick to them religiously. If you can’t afford to buy something that you want, you should either go without it or save up and get it at a later date.
Changing The Way That You Spend
Nobody is responsible for your debt but you and changing the way that you spend will help you manage it in the future.
If there is something that you want or need, get used to shopping around for it to find the best possible price.
Make a meal plan so that you are eating good food at home each night. The meal plan will help you to make a very specific shopping list. When you are in the supermarket, go with the shopping list and only buy the things that you need.
Learn to ignore special offers at the ends of supermarket aisles. They are only good deals if you intended to buy that item in that quantity in the first place. These offers are designed to get you spending more and buying items you did not need.
Get used to switching your services such as your home broadband, phone, electric, gas, and your insurance. Companies may reel you in with a great offer as a new customer and slowly increase the price the longer you stay.
By switching all of these services every year or so, it is possible that you will be able to save a considerable amount on the essentials for your home.
Look for ways to cut back on unnecessary spending. If you are paying for something that you are not using, such as the gym or a subscription to a streaming service, cancel it.
If you get takeaways on a regular basis, just have them as a payday treat. This will make you appreciate them much more, and save you money.