2 Practical Tips to Pay Off Debt and Stay Debt Free
It’s just normal these days – people with mounting debts usually from credit cards. A lot of people are blaming it on the recession; or on the rising costs of basic commodities; or on the unstable value of money; or on the instability of the economy in general.
There are other recognized reasons for the increase in people’s debt due to credit cards. One is the excessive use of credit cards for the simple reason that it is very convenient to use. Financial experts are saying that because using “plastic money” is so convenient, credit card owners are tempted to use more than cash, and use them more often. Another disturbing fact is that the use of credit card lessens the feeling of guilt when money is spent irresponsibly.
Think about it this way: the physical act of removing money or cash from the wallet and giving it to the cashier heightens the consciousness of spending money as compared to just handing over a credit card to the sales clerk. In the latter transaction, the absence of actual money lessens the blow of guilt or awareness that money is being spent irresponsibly. Is credit card use bad? Not necessarily. However, to be under the yoke of interest is, and when burdened with credit that a person is unable to pay off, interest compounds, burdening the person beyond belief.
Most financial experts say that the truth has always been and will always be this: debt is usually an offshoot when people spend more than what they are earn. These same financial experts, however, recognize that there are debts that are necessary, such as getting a home mortgage or a car loan, but these are the exceptions and not the rule.
Here are 2 Basic Practical Debt Management Tips for people burdened with credit card debts. When followed to the letter, these tips guarantee freedom from debt and stress.
Live Within Your Means
- Begin by putting your finances in order. Know how much you are really earning in a month. Do some pencil-pushing and put everything in writing; make a list of all your income – the “inflows” of money.
- Do the same thing with your expenses by listing down where your money normally goes in a month; this is also known as your “outflows”.
- Then, when you already have your inflows and outflows written down, analyze your spending pattern. Here’s a reminder: never leave an item unlisted so that you’ll get the real picture of your finances. This will then help you decide what to do next.
- Next, make a budget based on your actual income. Identify your priorities which should ideally include the necessities. If you can, make a detailed grocery list and use this when shopping. Never buy anything that’s not in the list.
Pay Off Your Debt
Your only way out of debt is to pay off each and every one of them. You can do this by following the snowball method of debt payment: pay off your debt with the smallest balances first while paying the minimum of the larger debts. This will ensure that debt payment is on the move, and that not long afterwards, ultimately all your debts will be paid off completely.