If the mere thought of your debt sends shivers down your spine and haunts your sleepless nights, you aren’t alone. According to USA Today, one out of every five families in America has more unsecured debts, such as credit cards and student loans, than they do savings. This can force families and individuals to make hard choices, often at the expense of their credit and financial future.
It’s true that debt can be a burden beyond compare. You set up a budget, scrape to make ends meet and you still can’t seem to dig out of the hole. It may be that you need to take an honest, in-depth look at your debt to begin scraping away at your possible misconceptions and coming up with a real plan to grab your financial control back from the grips of debt despair.
Behind the Numbers
The hard work begins with trying to analyze the type of expenditures that are contributing to your mountainous problems. Once you have a good grip on that, you can move toward conquering your debt triggers and get back on the road to financial freedom.
Analyzing your debt requires you to review your statements and categorize your expenditures, much like a company accountant. Depending on the age of your debt, you may want to start with up to a year’s worth of statements. However, even just the last 3 months can help you paint a clear enough picture about just what you’re spending money on.
On top of categorizing the type of expenses, take the time now to note where you rack up the majority of your debt. Identifying the places where you charge purchases to your credit cards on a regular basis can help you stop the debt cycle.
Difficult Realities
So, now you know what types of purchases you charge to your credit cards and where you tend to spend the most. Now it’s time to confront the reality of the situation. Just what drives you to use credit instead of cash?
In emergencies, credit may be your only choice – it happens to all of us. However, if you find that the majority of your debt is related to non-essential purchases such as clothing and expensive dinners out, it may be time to face the hard truth. Your debt situation begins, and hopefully ends, with you and the choices you make.
Hard Decisions
After you’re done beating yourself up over your past credit mistakes, take some time to plan how you‘re going to handle your credit in the future. The outcome of your financial future depends on it.
It may be that poor budgeting has led you to charge necessary purchases, such as groceries and gasoline, just to get by. If this is the case, it’s time to ratchet down and get serious about spending your money wisely. Go on a debt diet and eliminate monthly expenses that you honestly can’t afford. This can include your cellular phone, satellite television or gym membership.
Above all else, stop swiping the plastic. If you can’t pay cash for an item, don’t go to the store and certainly stay away from your triggers. Set up a savings plan for any desired item and don’t buy it until you’ve saved the money.
What does your debt say about you? Assess your debt profile and start to put your plans for a secure financial future into action.
Photo Credit: Jeremiahs
