Article by Simon Volkov
Debts are a worrisome problem. From personal debt to corporate and government debt, it seems these days that is the only thing on everyone’s mind. Business owners have been forced to cut costs and lay off employees. Consumers have become panic-stricken over how they can repay their debts. While we have little control over government debts, we do have the ability to regain control of personal finance.
Debts have a way of silently accumulating. The average U.S. citizen holds one or more mortgages, car loan, student loans and three credit cards. When people have more month than money they often use credit cards to get them through. Instead of paying back the full amount of funds borrowed they pay minimum payments; which increases their level of outstanding debt. When debts become insurmountable, people turn to bankruptcy.
MSN Money reports, “Americans owe more than trillion in creditor debt, not including home mortgage loans.” This averages out to approximately ,000 per citizen. The greatest challenge facing most people today is learning to live within their means. A large part of America’s debt problem is consumers have been encouraged to rely on credit. We have become accustomed to using plastic cards for everything from morning coffee to fun-filled vacations.
Consumers who are tired of being in debt must become proactive in taking back control of their money. The first step requires thorough review of income and expenses. When expenses are more than earned income it is time to engage in budgeting and stop wasteful spending.
If you want to get ahead financially, it is crucial to determine where you’re spending your money. A simple way to get a clear picture of where your money goes is to track expenses for one month. Carry a notebook and record every dime spent. Chances are you will be surprised at how much you could be saving if you stopped making impulse buys.
Multiple options are available to consumers ready to get off the debt-train. The easiest way is through budgeting. While this strategy requires self-discipline, it doesn’t cost a dime. Nor do you have to share your personal finance information with strangers in order to reach your goals.
Creating a budget is simply a matter of calculating how much you earn vs. how much you spend. If you earn 00 per month and require 00 to pay living expenses, you only have 5 per week. With budgeting, you need to learn how to maximize that 5.
If you aren’t able to stick to a budget, consider obtaining professional credit counseling. Nearly every major city has non-profit credit counseling centers which provide low- or no-cost services. The Department of Justice website provides a list of nationwide credit counselors and debt education programs at Justice.gov.
Debt consolidation loans might be an option for homeowners carrying high levels of debts. This strategy requires property owners to take out a home equity loan. Funds are used to pay off high interest unsecured and secured loans. Careful consideration should be given to debt consolidation loans because real estate is used as collateral. Defaulting on loans can result in foreclosure.
Debt settlement is a strategy which allows consumers to negotiate outstanding debts with creditors. This option is generally used when consumers can pay a lump sum of cash in exchange for creditors writing off a portion of the balance owed. Debt settlement should be used as a last resort because it can cause serious harm to credit scores.
Instead of perceiving debt reduction as overwhelming or impossible, think of it as a money game. Get creative in finding ways to reduce spending. Learn the art of using grocery coupons, product rebates, and buying food in bulk. Pick up bargains at yard sales, thrift stores or consignment shops. Sell items you no longer need and use the funds to pay off debts.
With patience and persistence you can become the master of your personal money game. Learning how to eradicate debts today can help you secure your future and provide peace of mind knowing you can live comfortably when it is time to retire.
About the Author
Discover more ways to eliminate debts from author and investor, Simon Volkov. His website provides an article library focused on personal finance, budgeting, credit repair, debt management, and investing strategies. Learn simple ways to take control of your money at www.SimonVolkov.com.