Every person suffers a financial crisis at different times in their life, what matters most are the decisions we make to stabilize at these critical times. We also have always to maintain sufficient funds to pay regular bills and daily expenses. Most people prefer taking debts and loans, whatever the decision you make it must have a viable payment plan and within your financial discipline as well. Otherwise, you will never have enough get out of debts or start an investment.
[Read: Things to Know About Debt Negotiation]
Factors to consider before taking any debts
A good debt should not only stabilize you financially, but it should also enable you to pay any existing debts and allow you to avoid any debts in future. To establish a tactical debt plan, several important factors you must consider. To determine your most viable debt plan, you need to achieve a proper balance among these factors. These factors include:
- Your credit score.
- Your monthly total income and earnings
- Your total monthly expenses and outstanding bills
- The debt’s total interest and payment duration
- Your outstanding debts and loans if any
Having known the important factors that affect your debt’s viability, it is necessary to maintain an updated and real debt record. If you are currently struggling under a mountain of debts, you must be suffering consequences of a negative mindset. Unless you adjust to a positive one, here are five reasons that prevent you from getting out of debt.
Unplanned or undocumented spending
Some people spend extravagantly beyond their optimum budget numbers. If you are among this lot, you need to adjust. If you don’t match your budget to your income, you will find it boring, dumb, and restricting. Indeed, if you don’t budget you’ll always find it difficult to balance your income to your expenses and might never get out of debt. Whenever you consult your bank account, it will always seem a crapshoot with insufficient funds. If you excuses to budgeting are about tediousness, you are yourself to blame since several free software like PowerWallet are available to make your budgeting hassle-free. This software does everything for once you input your monthly income and expenses.
Shopping for fun
Once you spending habits become a form of recreation, you will probably spend your savings to the last coin. Without a significant disposable income, you won’t have much to afford this lavish spending habit. Most people of such lifestyle will buy any they like without considering its essence or cost. By doing extensive research on the prices of goods in different stores before purchase, you will not only spend less and save more, but you will also get quality products on each purchase. That way, you will never get into credit card debts.
Choosing wrong friends or partners
Evidently, it is always hard for anyone to advance if they follow a multitude with everyone trying to outshine others. You will certainly spend more trying to keep up with such friends. That does not mean ditching your friends; instead, you should reason rationally to choose real friends to spend time with and avoid those that are always competing to outshine you. Your real friends will always appreciate you even when you can’t afford their lifestyle.
Having a tendency to postpone things
You are doomed to downfalls if you always have excuses for failing to budget your money. Do not wait until the holidays ends or you get a better-paying job so that you draft your budget or clear your debts. Or hope to stop spending if you buy evolving products. You will never get a perfect time. Smart budgeting demands that you prioritize the basic needs first and the others to follow. You will always be in debts as long as you keep postponing things.
Living devoid of character
If you are too lazy, weak or extravagant chances are when in debt you tend to accumulate more debts. From my past such experiences, I have learned that we should always be optimistic about our debts regardless to the extremism of our situations. Whether the reason for the debt was a hospital bill, receding economy, or inflated housing market, we should always be responsible for our actions. Taking responsibility means that everyone should accept their actions and react responsibly to the consequences. This situation does not apply to those living in poverty; rather, it applies to those who have suffered a catastrophic experience like a total disability that pushed them beyond their ability.
[Read: What Are Your Debt Repayment Options?]
You hold the ultimate decision
Usually, people face problems that exceed their current financial capacity. In such a case you are forced to borrow a debt in order to meet these demanding needs, however, before getting into debt, you must reason rationally. This process involves examining your ability to recover the debt without getting into more debts. Once you conclude that the debt is viable enough and accept the debt’s terms, you must act responsibly by paying your debtors in time. That way, you will win your debtors’ trust and live in financial freedom.