Today when USA’s budget plans are out in the open, everyone knows how the government is in a huge debt without any possibility of paying the money back. This is a situation in which USA is not alone. Many other countries also find themselves in the same boat. If we however narrow the condition of debt to each and every individual, we would not be surprised to see that the situation here too stands the same.
Who is not in debt nowadays? With the market economy being lost through an unfortunate series of recessions, it is no surprise that people are turning to borrowing money from financial firms and the banks to survive. The cost of living is much higher nowadays than before, and we have to somehow make it. Do you need shelter for your family? You need a house. So you must apply for a mortgage loan. Do you want to start a new business? So you should ask for a loan. And then when you are in debt to several lenders, you start to lose the fight under all the financial pressure.
The trick is to realize that despite the various reasons in today’s financial infrastructure which have pushed you into debt it is possible to live a debt-free life. Yes, it is not a magical way; all it requires is a lot of patience, self-control and “money smartness” which implies the ability to be able to handle the inflow and outflow of money properly. There are many people who are completely debt free and they stand as your inspiring models. So what can you do to stay away from debts?
Whenever things go wrong, and you need money, do not think immediately that debt is your only choice. Sometimes it is, and most of the times it is not. First try to think if it is possible for you to work extra hard or get another job in order to make that much of money to meet your needs. And if possible you can also cut down on your expenses to save more dough. Whatever you do, do not start with debt as your first option. Debts should be the last way out, only of the first two methods fail.
Think before you get your loan. Are you sure that what you want is the thing that you need? Sometimes you need to start a business for which debt is inevitable. Such a debt is a good debt. But if you want the new stylish car like the Porsche that you had seen in the showroom, and for that you go into debt, it would not be a smart move.
You do not need to think twice. Just think wise and you will find it easy to stay away from debts.
3 misconceptions about debts
It is now a grateful TV format: people deep in debts who no longer see a way out, let themselves be helped for the eyes of the nation. There are a number of persistent misconceptions:
• Debts only occur with the lower educated. Only 55% of people with unsustainable debts are less educated.
• Debts only occur in people with a lower income. This is not the case. People often live according to their income; 40% of people with unsustainable debt have a net monthly income of more than $2,000. Not exactly a low income.
• With a buffer, the chance of debt is small. This sounds safe, but that is not necessarily true. A buffer of $5,200 per family offers a solution for unforeseen expenses, but with a major financial setback this buffer can suddenly be swept away.
Debts are not always their own debt
If you never give more than you enter, you will never drop in the red numbers. But what if you are faced with adversity? For example:
• You lose your job or go bankrupt.
• You become divorced.
• You or your partner becomes seriously ill.
• Your partner is dying.
• You see yourself forced to sell your house with a lot of loss.
To find the way back, you have to take action yourself. And avoid making the problem worse by wrong habits. How do you get that turnaround for each other? What steps can you take to turn the financial tide and get the debts bearable?
1. Stop acknowledge the problem
Trivializing financial problems is common, but this is not exactly what you have to do. Poor finances are no shame, so bring it forward.
2. Dare to look forward
And try to think in terms of solutions, even if the end of your problems seems far away.
3. Provide financial insight and overview
Map out your income and fixed costs and see what is left over. Then keep track of your expenses weekly.
4. Set goals and budget
This helps to keep expenses under control. If you have a budget for, for example, groceries, clothing and outings in mind, it is easier to keep a grip on this.
5. Cut where possible in fixed loads
Focus on the big expenses and think off the beaten track. The car road or smaller houses are sometimes unjustly excluded. But is not that strange when you can get out of the worries?
6. Believe in yourself
Change takes time and the beginning is the hardest. Remember that all the little bits help, but it takes a while before you reap the benefits.
With an iron will everything succeeds, but why would you only do it if there are authorities to help you? A starting point is municipal debt assistance.