With reports of Uncle Sam going into insurmountable debt doing rounds on the internet and IMF bearing witness to this conviction in its Global Fiscal Monitor report, you can’t help but fear a terrible fate. But as a matter of fact, you aren’t as helpless as you think. You can’t help the U.S in resolving its debt crisis with your master plan, but nonetheless, you are answerable for your debt and you can always work your way out of it.
You Have Been Doing It All Wrong – How NOT to Fight Off the Debt
You have got to admit that the Ghost Of The Recession Past (2008) still haunts you and while times are still peaceful, you must strive to get rid of debt because if the future turns out to be the way we are anticipating it to be, there would be no room left whatsoever to fight off the debt.
Above all, the best debt pay-off plans start with an actual plan. And, what most people often overlook is the approach behind executing a plan which is the grey area that needs to be defined. Whilst setting off for a debt-free mission, people make mistakes which make them sink deeper into the swamp. If you are ready to gear up, just avoid these common mistakes which people make while fighting off debt.
1) Not Knowing What Is Leading You To Debt
If you happen to come across a first-person narrative of anyone stating how he got into debt (credit card), you will find one thing for sure, and that is mindlessly tackling all unexpected expenses with a single swipe of a credit card.
People who have faced the wrath of the credit card debt and have lived to tell their story often regret not creating enough provisions for the rainy day. The absence of an emergency fund when coupled up with extravagant living surges the debt level exponentially. Living a minimalistic lifestyle and curbing down expenses while ensuring that you are able to pay that minimum amount for debt clearance at the end of the month would really help.
2) Continuous Use of Credit Cards
Most people don’t stop using credit cards while paying off debts which nullifies all the progress they make. Think of this situation as using the wiper to wipe off the water while standing on the shoreline. You might get some delusional solace after wiping off some water in between the waves, but when the second wave comes, it will come to you strong and you won’t be able to counter so much water (which keeps coming back) at once. The same is the case with debt, paying off a small amount it while amassing a pile of it on the other side won’t do you any good.
3) Shying Away From Negotiations
It’s really surprising to see that most people don’t consider renegotiating terms from their creditors/credit card issuers while paying off debt. A small cut off on interest rates could very easily save you hundreds of dollars. Plus, this becomes relatively easier when you are ready to pay back a small amount upfront.
4) Pursuing Too Many Things At Once
You have to exhibit a strong determination to fight off the debt and stay away from all other pursuits be it planning a summer vacation, gaining points on one’s credit card or throwing a birthday party. This juggling over other priorities soaks up all the progress (which could take months) at one go.
To sum up, one must never rely on his/her instincts while paying off debt and should adhere to a well thought out plan instead. There are multiple blogs on the web such as Wise Bread, Every Buck Counts, Money Crashers and others which address all your personal finance problems and give you detailed pieces of advice on getting out of debt.
Dedicating all savings to pay off monthly installments (that you can afford of course) and treating the debt balance as a fixed bill till the point that all debt is paid off will work wonders for you.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.