Among millions of people the world over, debt reduction is a critical issue that they not only must deal with, but they must master if they are to become financial free. The spending habits of many a person have resulted in many persons falling deeper and deeper into the seemingly bottom-less pit of debt.
Some of the main causes of debt are:
- Poor budgeting - Not planning and/or executing your budget properly. Good budgeting focuses on actual net income and not projected. It also differentiates expenses between wants and needs. It also takes a lot of discipline to live by your budget.
- Living beyond your means - Your expenses surpass your income. many persons try to live lavishly on a net income that simply cannot afford it.
- Being swayed by trends and trying to match stride with the "Jones ' rather that living by what you can afford.
That being said, if you are caught in the debt trap, chances are you won't be able to get out that easily. It will take some effort on your part as well as possibly some professional assistance to get out of it. Here are some steps you can take towards successful debt reduction .
- Do some honest examination of your self. Honestly ask yourself, "Am I a chromic buyer? Do I have a problems resisting the urge to make purchases? If the answer in yes, or even if you are not sure, then you owe it to yourself to seek assistance from financial counselors. Many of the companies that offer debt reduction solutions also offer financial counseling. Make full use of this.
- Know your debt and who your debtors are. Also know when your debt is due to be liquidated based on current payment schemes.
- Know your spending habits. Be truthful enough to differentiate between wants and needs and disciplined enough to live by it.
- Create a realistic budget that you can live by. As mentioned before, your budget should focus on real and not expected income. Within your budget, cater for changes in the weather that results in changes in the cost of utilities. That way, you can avoid going to creditors in times when there is a greater demand to cooling or heating.
- If your expenses are too close to, or even greater than your income, then you may need to take a look at debt reduction and/or consolidation options that are available to you.
- Avoid credit! Use cash or a debit card. If you have to resort to credit for what can be considered as normal transactions, then you simply cannot afford it. You might be living beyond your needs here.
- If you can - no matter how small the amount - maintain a savings account. If you believe that you have problems spending, then maintain such an account in an institution or location that makes it difficult to access. Further more, if you recognize that you do have problems with your spending, make sure not to take out a debit card on your savings account, and set up a standing order to transfer a fixed amount to that savings account.
Admittedly, there will be times when you cannot save and you may even spend more that we actually make. This should be more of an exception than a norm. Everyday personal debt solutions as those outlined above, make sense, thee reduce personal debt and can then be applied toward debt off indefinately
Good personal debt reduction practices start with an honest and thorough re-evaluation of the money you spend and the money you make. It also required the personal resolve and commitment to do better by bringing the debt cycle to an end.
