Help With Debt - Top 5 Ways to Be Free From Debt
When you are looking for help with debt, sometimes it can be difficult to find just where to start. Each of us have a huge tug of war going on within ourselves between needs and wants -- between spending and saving -- between living within our means and spending ourselves into oblivion.
When a family lives beyond its means, it has to fund the excess with debt. They bring spending forward, so they can have what they want NOW, in exchange for putting an obligation on future earnings. If the family persists in over spending, at some point nobody will loan them any more money, and they hit the wall. This is when family finances fall apart. But you and your family can beat back the bondage that debt brings to your financial life. It all starts with a commitment to a few simple basic rules:
Root out your debt addiction
Spending is an addiction as potent as any drug. It gives the spender an exhilarating expectation of the purchase, a euphoric high when the purchase is made and almost always a huge psychological let down when reality sets in and the thing they purchased loses its luster. Take a time out before making a non-essential purchase. Write down all of the things that you wanted to buy and ask yourself if you really need the item now, or if you can wait until you have cash in hand. The more you do this, the weaker the hold of debt addiction becomes.
Learn to Delay Gratification
If you want to purchase an item tell yourself you will get it next paycheck or next week. Doing this gives you a sense of accomplishment for having scheduled the purchase, and the reward becomes that much more exciting with the anticipation of getting it. If waiting for a few more days or until next paycheck makes the difference between purchasing on a credit card or buying with cash, the experience is that much sweeter.
Build an addiction to Saving
Just as spending is an addiction, you can build a habit of saving. Learn to savor putting away that little extra. I think too many of us missed out on the experience as a kid of saving our money in a piggy bank. Filling that little porkster can teach you a lot about expectation and reward. Here's an idea, try paying yourself 10% of your paycheck and put it into your savings account. You can do this even if you live paycheck to paycheck. Try your hardest to avoid spending this money, but be aware when you start dipping into it. I think you will find that you can avoid enough little purchases to keep your savings relatively secure.
Learn to budget
Do you have any idea what it costs per month for you to live? If you had absolutely no debt payments, other than your mortgage and maybe a single car payment, how much would you need for food, utilities etc. just to live? This is your essentials budget.
How much do you need, above and beyond your essentials budget, to meet personal obligations you have made to yourself and your loved ones. This would be your needs budget.
Finally, if you income exceeds that, how much do you absolutely need, above and beyond your needs budget, to live a comfortable life? This would be your wants budget.
Most of the time this is where debt gets out of hand. There is no limit to what a person can want and with a credit card available... Well you see how it can easily get out of hand.
Learn to live within your means
When you find where your budget lies you can begin to decide if you can afford to live the way you have been. Where needed, make adjustments to align you spending with your income. Simply living within your means can lift a huge burden from your shoulders. Go even further, make it a goal to live 10% below income level. Think of it this way: For every dollar you spend below your monthly income, that's another dollar you can place into savings.
Hopefully these ideas will help you with debt problems so that each spending decision you make becomes one of "can I afford it" instead of "how much do I have left on the credit card".
When a family lives beyond its means, it has to fund the excess with debt. They bring spending forward, so they can have what they want NOW, in exchange for putting an obligation on future earnings. If the family persists in over spending, at some point nobody will loan them any more money, and they hit the wall. This is when family finances fall apart. But you and your family can beat back the bondage that debt brings to your financial life. It all starts with a commitment to a few simple basic rules:
Root out your debt addiction
Spending is an addiction as potent as any drug. It gives the spender an exhilarating expectation of the purchase, a euphoric high when the purchase is made and almost always a huge psychological let down when reality sets in and the thing they purchased loses its luster. Take a time out before making a non-essential purchase. Write down all of the things that you wanted to buy and ask yourself if you really need the item now, or if you can wait until you have cash in hand. The more you do this, the weaker the hold of debt addiction becomes.
Learn to Delay Gratification
If you want to purchase an item tell yourself you will get it next paycheck or next week. Doing this gives you a sense of accomplishment for having scheduled the purchase, and the reward becomes that much more exciting with the anticipation of getting it. If waiting for a few more days or until next paycheck makes the difference between purchasing on a credit card or buying with cash, the experience is that much sweeter.
Build an addiction to Saving
Just as spending is an addiction, you can build a habit of saving. Learn to savor putting away that little extra. I think too many of us missed out on the experience as a kid of saving our money in a piggy bank. Filling that little porkster can teach you a lot about expectation and reward. Here's an idea, try paying yourself 10% of your paycheck and put it into your savings account. You can do this even if you live paycheck to paycheck. Try your hardest to avoid spending this money, but be aware when you start dipping into it. I think you will find that you can avoid enough little purchases to keep your savings relatively secure.
Learn to budget
Do you have any idea what it costs per month for you to live? If you had absolutely no debt payments, other than your mortgage and maybe a single car payment, how much would you need for food, utilities etc. just to live? This is your essentials budget.
How much do you need, above and beyond your essentials budget, to meet personal obligations you have made to yourself and your loved ones. This would be your needs budget.
Finally, if you income exceeds that, how much do you absolutely need, above and beyond your needs budget, to live a comfortable life? This would be your wants budget.
Most of the time this is where debt gets out of hand. There is no limit to what a person can want and with a credit card available... Well you see how it can easily get out of hand.
Learn to live within your means
When you find where your budget lies you can begin to decide if you can afford to live the way you have been. Where needed, make adjustments to align you spending with your income. Simply living within your means can lift a huge burden from your shoulders. Go even further, make it a goal to live 10% below income level. Think of it this way: For every dollar you spend below your monthly income, that's another dollar you can place into savings.
Hopefully these ideas will help you with debt problems so that each spending decision you make becomes one of "can I afford it" instead of "how much do I have left on the credit card".
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