No one enjoys being in debt. It's something that leaves you feeling helpless and alone. It's also something that is completely in your control. The majority of people that find themselves in debt ended up there because of their own habits. It might have been because they overspent with their credit cards or maybe they didn't plan well enough for an emergency. Whatever the case might be, they got themselves into debt and they need to work to get out, as well.
Sometimes getting out of debt isn't all that easy, though. It can be hard to know where to start. A lot of times we keep making the same mistakes, which makes it nearly impossible to end the cycle. Here are seven things that are keeping you in debt and ways to overcome them.
You Live in a State of Denial
Too often we tend to ignore the truths if it's not something that we really want to know. It's important to admit that you are in debt and that you have a problem, as that is the first step to setting up a plan for change and getting back on the right track.
You Fail to Understand the Real Reasons You're in Debt
One of the worst things that can be done is to start working towards becoming debt free without actually taking the time to assess why you were in debt to begin with. Do you have a problem with credit cards? Did they cause you to spend more than you make? How about your bills, are you neglecting them for the "fun" things in life? The first major step in this process after admitting that there is a problem is to figure out why this problem occurred in the first place.
You Don't Have a Budget
If you find yourself in debt, then it's fairly safe to say you need a little help to manage your money. If you don't have a budget set up, then this is a big no-no. It could be something you manage by hand using Excel or you could use a service like Mint.com. This will help you track the income you have coming in each month and also how much you are spending. When you can see the movement of your money, there is a much greater chance you will be able to keep yourself in line and accountable.
You Have a Problem Saying "Yes"
Throughout our lives, we are going to have times when friends and family are going to need our help. This might be a small loan because they are having debt issues themselves or it might be a great investment opportunity. Too many times, we find ourselves saying yes to these things without thinking about the fact that they might be stretching us too far financially. The next time you are approached, understand that it's okay to say no. Sometimes it's better to look out for your own well-being than someone else's.
You Fall Victim to Lifestyle Inflation
Most of us have probably heard the term lifestyle inflation at some point. Think about someone that just graduated from college and landed their first real world job. Their paychecks are likely more than they have ever received before. So they decide it's time to give up the Ramon diet and start eating real food. Maybe it's also time to trade up their college wardrobe for something a little nicer.
A little time passes and that same person receives a promotion at their job and it comes with a raise. A little extra money each month and they feel like it would be better if they started eating organic food and looking nicer with designer clothes. This is lifestyle inflation. As someone starts making more money, their spending also increases. Often times, the spending increase can outpace the income increase, which is what lands someone in debt.
If you are lucky enough to get a raise at your job, factor this into your budget. This will give you the right to spend a little more money on the things you like, but will also keep you in line with where you need to be financially.
You're Only Paying the Minimum on Credit Cards
If you are working to become debt free, then the last thing you want to do is pay the bare minimum on your credit card. By doing this, it will take years to pay off your entire balance. Instead, include this in the budget that you create for yourself. Once you find out how much disposable income you will have at the end of each month, put this amount towards your debt. This will help reduce your debt at a much quicker pace.
You Haven't Asked for Help
To be in debt is a scary thing, but it's not something to be ashamed of. If you are struggling to get a grip on the problem, you might feel like there is no place to turn. Don't ever feel like you can't talk to people about what you are going through. It's likely that people close to you have been in your shoes at some point. Talk to a friend or a family member. Let them know that there is a problem and you need help. If your debt seems unmanageable, seek outside help through debt consolidation. Debt consolidation can combine your debts into one debt with one monthly payment (through credit card consolidation, a home equity loan or a personal loan, for example). Don't be afraid to seek options if you are struggling.
It's likely that there are several things that are keeping you in debt. By following some of these tips you will find yourself debt free in no time.