Whether your money troubles involve credit card debt or mortgage loans, these tips for dealing with debt will help you attract more money into your life…and maybe even create financial abundance!
First, a quip about money:
“The safe way to double your money is to fold it over once and put it in your pocket,” said Frank Hubbard.
If you’re in debt because of poor investments, then you know what Hubbard is talking about. For serious help achieving your financial goals, read Solve Your Money Troubles: Get Debt Collectors Off Your Back & Regain Financial Freedom.
And, here are financial expert Ethan Ewing’s six tips for dealing with debt…
Solve Your Money Troubles – 6 Tips for Dealing With Debt
“With the economy in flux, it’s more important than ever to stop paying interest to the credit card companies and to stop living beyond one’s means,” says Ewing. “Credit card debt — and the balances carried from month to month — is a huge concern.”
1. Track your spending habits and patterns. For one week, carry a small notebook and write down every purchase. “You will soon see how small purchases add up — coffee, fast food, candy bars, drugstore purchases and items you ‘just pick up’ in a shopping cart,” Ewing says. “Or you might learn that you do not spend much frivolously and need to look more closely at ongoing bills or income. This step alone is likely to help save money.”
2. Make a budget or spending plan. Creating a budget means taking responsibility for where your money goes, rather than allowing whims, advertising or habits to influence what you buy. Divide your spending into the categories of “musts” (food, housing, basic clothing, transportation, education) and “optional” (dining out, entertainment, gifts). This will help solve your money troubles by giving you financial control…which can lead to financial abundance.
3. Pay for everything in cash. Pay bills with checks or set up automatic payment plans to eliminate worry about a late or forgotten payment. For all other expenses, use cash. Debit cards can be helpful for transactions for which a credit card is required – such as paying for gas at the pump – as they allow people to still pay with available cash rather than risking piling on debt. This tip for dealing with debt includes being cautious using a debit card online, as it can create a theft risk.
If you’re in debt, read Why Are Women Bad With Money? 7 Money Mistakes Women Make.
4. Trim your excess spending. Examine your budget’s “optional expense” category to trim unneeded costs and use that money to pay off debt. No one needs premium TV channels or restaurant meals! If you want to create financial abundance, you might want to eliminate modern-day “necessities” such as cell phones, home Internet access and caller ID. Just putting $15 more a month toward a credit card bill will painlessly help you solve your money troubles.
5. Pay more than the minimum on your bills and credit cards. Pay every bill in full, on time. If you can’t afford to pay for something in the month you purchase it, don’t buy it. If, however, you cannot pay your credit card bill in full for some reason, pay more than the minimum payment. Minimum payments are set at a very low percentage of the balance, and typically go primarily to interest and fees, rather than paying down principal significantly. Paying only the minimum will maintain a debt position for years. The resulting total interest payments could exceed the amount borrowed in the first place.
“If you cannot pay all of your debts down in a short period of time, then prioritize,” Ewing advised. Make minimum payments on the cards with the lowest interest rates, and put all excess cash to the card with the highest interest rate. Once that is paid off, put excess cash to the card with the second-highest rate, and so on until you’ve paid off your debt.
6. Seek debt management help. “If you have serious debt that you can’t pay, know that help is available, especially if the situation was caused by a short-term problem such as a medical emergency,” Ewing said. “If absolutely necessary, you could borrow from relatives, borrow against life insurance or retirement funds, or consolidate old debt onto a no-interest credit card. If you need more support to pay off your debt, seek out a credible debt resolution advisor.”
“When it comes to statistics about credit card debt, you can choose to be among the indebted, or you can choose financial freedom for yourself and your family,” Ewing said. “Follow the steps above to pay off your debts so you can stop paying interest to your creditors and instead start saving for the future. Then you can be one of the lucky ones who are prepared to ride out any economic bumps that lie ahead.”
For more tips on dealing with debt, read 7 Ways to Get $10,000 – From Refinancing a Mortgage to Asking Mom.