Tips for those in debt

Excessive debt doesn’t happen overnight. However, you often don’t realize the extent of your debt until you hit overload. You have a few maxed out credit cards, a mortgage, two car loans, and student loans. On top of that, you have a household to run and children to raise. The good news is that you can recover.

Reeling in Spending

Chances are pretty good that your debt is a direct result of poor spending habits. It’s a problem that many people have. You see something in a store or online and want it. Unfortunately, buying something that you don’t have the cash to pay for, will only add to a mounting pile of debt. In order to turn the corner and reduce your debt, you must stop making impulse purchases.

Maxed Out Finances

When you begin to rely on credit cards to cover daily expenses, it’s only a matter of time before you start to make late payments or even miss a payment on an important bill. As a result, your credit score begins to spiral downward. Unfortunately, this means that should you need a small personal loan to recover, you qualify with a traditional bank. On the upside, there are other companies that offer installment loans to people with less than perfect credit.

Paying Down Debt

In order to take charge of your life and turn things around you’ll need to pay down your debt. While the process is easy, it will take time to restore your credit to good standing status. Credit cards generally have the highest interest rates versus auto and personal loans. Due to this fact, it makes sense initially to put the focus on your credit cards first. You can work from one card to the next, starting with the one that has the highest interest rate.

Learning to Live on Cash

One way to achieve a fresh start is to allot a weekly cash allowance for you and your spouse. This will prevent you from using the checking account for anything but your monthly expenses. It will teach you the value of each dollar and teach you to make it last from one week to another.

Spending Quality Time Together

There are many things you can do as a family together that don’t cost a lot of money. Take a trip to the park, spend the day at the beach or visit your local museum. There are also many activities that you can do at home, such as hosting a movie or game night, doing arts and crafts, tossing the ball or riding bikes.

Becoming Frugal

Many people misunderstand the word “frugal.” They view it as becoming cheap. Nothing is further from the truth. Frugal means that you understand the value of your money and want to account for everything you purchase. For instance, before going to the grocery store, a frugal person will check fliers from local supermarkets to see where they can get the best deals. They also use coupons, doubling up on their efforts. When the season ends, stores place the merchandise on sale to make room for the upcoming season’s supplies. Sometimes you can save over 75 percent off things like decorations and clothing. This is where being frugal pays off.

Reducing Household Expenses

There are many expenses that come with your home. Thankfully, most of them you can reduce. If you have cable service, select another package, go to basic service or eliminate it altogether and sign up for Hulu or Netflix. If you have unused data each month on your cell phone, reduce coverage. Bundling services like auto and homeowner’s insurance is yet another way to save a few bucks each month. If you add these few items together they can add up to a few hundred dollars each month in savings.

Reducing your debt is not something that will happen overnight. However, if you start spending your money wisely, you can recover in less time than you imagine.