We can all pretty much agree, no matter how much we understand about finances, that staying out of debt is a pretty good idea. But if you are in debt to such a degree that it is impacting your life negatively, what can you do? Knowing that you are in a state that needs to be repaired means that you have taken the first step. We are about to share some tips with you that will help you to whittle down your debt and to stay in a state where debt is no longer an obstacle in your life.
The first thing you need to do is to learn to forgive yourself for past mistakes. Too many people walk around every day, beating themselves up because of past financial mistakes. You know that you made mistakes that resulted in too much debt. Learn from those mistakes, forgive yourself and move forward with a plan of action to never get in over your head in debt again.
So you have learned from those past financial mistakes, and that is a good thing. Now is the time to commit to yourself and to your family that you will save up enough money to make any major purchases in the future. Don’t ever use a line of credit to pay for the things that you want/need. The only exception to this rule would be if you are going to purchase a new home in the future. Even auto purchases should be made via money that you have saved up. And remember, before you purchase a home, make sure that you have saved at least 20 percent for your down payment.
Sticking with this step may make you feel like you are living on less money than you are used to. But by learning to save money for purchases, and for emergencies, you will find that you become more financially responsible over time.
How do I make purchases without going into debt again?
Here’s the quick answer to this important question: Only buy things with money that you have. Remember, when you use a credit card to make purchases you are really borrowing money, and at a high interest rate most of the time. You should also avoid borrowing money from friends or family members, as debt is debt and money issues can lead to major fallings out between people who care about each other.
Start a Budget
Now that you are on the path to not using your credit cards for purchases and saving money when you can, it is time to get on a budget. Budgeting is a bad word to the financially irresponsible, but it is the only way to track money coming in and going out of your bank account. By drafting a basic budget and tracking it every month, you can find expenses that can be cut and make better financial choices in the future. You don’t have to be an accountant to realize the importance of creating, and sticking with an organized, realistic household budget.
It is not an easy thing to honestly assess your financial situation, especially when you have made some mistakes in the past. However, if you put these basic financial tips into practice, and stick with them for the long haul, you will be able to significantly improve your financial situation. Living without excessive debt is the only way to live. You will be glad that you took the time to learn these tips and your family will be better able to enjoy life when you are not strapped to excessively high levels of debt!