We hear a lot of messages about becoming debt free, but many Americans are still confused about how to achieve their goals. While at face-value most of these steps are simple, they can be very difficult to employ.
The first step is to always start a budget – but it’s important to distinguish needs from wants. Needs are absolute necessities such as rent and bills, but as much as you may think you need it, the daily trip to the coffee shop likely doesn’t fit the criteria. If you’re really willing to buckle down, many people are also “cutting the cord” by getting rid of their expensive cable plans and relying on their internet connection for entertainment. Regardless, one you see your budget on paper, you will have a better understanding of where your monthly income is going.
Becoming debt-free is not only good for removing a lot of stress from your life, but it has many other benefits that make the effort more than worthwhile. One of the biggest and more immediate impacts is how it affects your credit score. A good credit score is crucial to your financial health and affects how much you pay for insurance, which apartment complexes will accept your application, or if you’re able to secure that big loan for your next car or house.
Using your credit cards less is a given, but something we highly recommend is to start using cash more often instead of your debit cards. There’s a psychological factor in play when you see the cash leaving your wallet that tends to make people more careful about how they spend their money. While using a debit card does take directly from your bank account and is more convenient in most situations, you can’t achieve the same effect which makes it harder to keep track of spending.
If you’re still overwhelmed by credit card debt and it’s reached the point of becoming completely unmanageable in your situation, bankruptcy can be a finial option. While filing for Chapter 7 or Chapter 13 bankruptcy isn’t something most people want to do, it can lead to becoming debt-free and help you in the long run. If you want more information, click here. If you are seeking a free consultation, feel free to contact us and we’ll be happy to meet with you!