Face the debt – look it in the eye

Debt Solutions 4 UsWhile getting into debt is relatively easy, getting out of it is something that takes time and a lot of hard work. The good news is that anyone CAN do it. Managing one’s debt and even paying it all off is possible. All you need to do is to change 5 habits to get yourself debt-free.

The first habit that you need to have is to consistently face your debt. Many of us become overloaded with debt simply because we refuse to deal with it face to face. The best way to find out where your debt stands is to find out your debt-to-income ratio. This percentage informs you how big a portion of your income goes to paying off your debt. If your debt-to-income ratio is high, this means that you may be literally drowning in debt. While some would say there’s no need to state the obvious, seeing the actual figures may help you get started towards paying off your debts and staying debt-free.

The second habit that you need to form is to stop using your credit cards. This may be the hardest thing to do for most people, especially those who’ve come to depend on credit cards to buy things when they are strapped for cash. If you want to start managing your debt and eventually becoming debt-free, then you can’t continue using your credit cards and taking on new debt. The more you use it, the bigger your debt will be which will mean an unending cycle of gaining debt, paying it off, and gaining it back again.

Making a budget and keeping it is another habit that you’ll need to form. Your budget will be your plan on how you will be using each penny that you earn. With a budget, you’ll be able to see where all your money goes, how much you really need to get by, and where you can actually cut costs. A budget will also help you create your debt plan because you’re able to calculate how much money you can spare to pay off your debts.

The fourth habit that everyone needs to learn is living within your means. This is an old adage that many rich people live by and we should also follow it. Almost always, the reason why people fall into the debt trap is because they always spend more than they make. So, if you want to get out of debt, you’ll have to start to cut down on your spending and make sure that you always keep your spending below your monthly income.

The last habit that you’ll need to learn is differentiating between a “need” and a “want.” It’s easy for any of us to think of something that we want to buy as something that we need. But that new phone or fancy car is not really a necessity. Food, shelter, and clothes are all basic necessities that we need to spend on. But the others are just frills that make us feel better. .