There are many things that can cause you to get out of control with your spending and spiral you into that world of debt. It doesn’t even have to be bad spending habits or credit card debt. Medical debt and college debt are also both burdensome on your wallet and your savings and your credit. However, once your finances have gotten out of control it can seem like you’ll never get them back under control.
You didn’t go into debt overnight, so it will take more than a day to get back out of debt. You just need to find a plan and stick with it if you want to get things back under control. Here are some things that might help that process along.
Bankruptcy Isn’t A Death Sentence
If you need to file for bankruptcy because your debt has gotten way out of control, don’t let yourself feel like you’ve signed your death sentence. You can rebuild your credit after bankruptcy. You do want to do some research and talk to a professional (like a lawyer that works in bankruptcy cases) about your options and what will actually be written off when you file.
College loans have a lot of stipulations on whether or not they can be expunged through bankruptcy. Often your medical bills will still remain as well.
Pay Off Loans And Credit Cards
Too many open credit and loan accounts can harm your credit rating just as much as not paying your bills can. Get those loans paid off, and pay off those credit cards before you cancel them so you can avoid penalties.
If you have more than three credit cards you may want to consider canceling some of them. You may think it’s good to have them, but it’s definitely taking a toll on your credit score. Nix the store cards first, unless they give you a really good reward for using them.
Start A Savings Account
One way to get your spending under control and ensure you don’t need a loan or to dip into credit cards when an emergency rises is to start a savings account. Don’t touch this money unless it’s an emergency. Don’t connect it to a debit card at all.
For the best use of a savings account, you want to have three to six months worth of income put away in it. This will help in case you lose your job, which can sometimes happen unexpectedly. Try to find a savings account that bears interest, that way you’ll make some money while saving it!
Learn The Difference Between Wants And Needs
One more thing that will greatly help you save more and spend less is to learn what you need and stop just buying the things that you want. Many consumers waste a lot of money on wants and they don’t need to.
Buy the cheaper food, shop at thrift stores, and start clipping coupons. Unless you’re going to spend 50% of your week playing video games on a console, just play the ones available in free apps on your phone. Save where you can, spend less, and save more, and you’ll be in control of your money instead of letting it control you.