Governments buy votes, and they get into debt to do so. And when they’ve borrowed too much, when lenders (bond buyers) pull in their horns, the Fed just prints what they need. The Fed has a printing press, you don’t. At Midas Legacy our goal is to get you to the sunny beach of retirement as quickly as possible, but debt can hang over your quest like a dark storm cloud.
Chances are if you’re reading this, you’re in debt. The latest figures are about 75% of all Americans owe some form of debt. It could be student loans you’re still paying back fifteen years after graduating, it could be credit card debt from your last family vacation, or maybe it’s just the slow mounting of a number of poor financial choices you’ve made. You may even feel consumed by debt, sure that you’ll never be able to dig yourself out of that hole or get that debt monkey off your back. In your bleakest hours, you may even start eying the lottery as a wise investment option.
But please, don’t despair! There are ways to free yourself from debt that don’t include winning the lottery or pulling off a diamond heist. At the very least, the following tips will help you manage your debt much better and lessen the burden – in some cases significantly – of the debt you do owe. This list of suggestions are not always easy to implement, but they work.
– A great place to start is to take stock of every cent you currently owe and every cent you’re bringing in. Sit down and create a spreadsheet that lines up all your liabilities. This includes all monthly payments (rent, mortgage, insurance, etc.), amounts of interest, and a grand total of all balances. You’ll want to update this spreadsheet on a monthly basis. If you do, it will show your debt eventually dwindling. That can be a great motivator.
– Another perennial lesson is never pay just the bare minimum on your credit card debt. This is how credit card companies make money, because the longer you’re in debt to them, the more interest they can tack onto the amount you owe. In the long run, you could end up paying thousands of extra dollars from interest alone without ever chipping away at the original amount you borrowed. So whenever it’s possible, always pay more than the minimum amount printed on your credit card statement. And if it’s possible to pay your credit card balance in full each month, so much the better.
– Which brings us to another great tip for the debt-prone: only carry one credit card. The only reason to own more than one credit card is a desire to increase your debt. We’re trying to reverse that trend. If you have debt on multiple credit cards, consider consolidating them into one payment (more on this below), and cut up those extra cards.
– Avoid declaring bankruptcy. You should only do this as a very last resort, since declaring bankruptcy will pretty much follow you through the rest of your days and will have large negative effects on your ability to secure a mortgage, car loan, or even opening a new bank account.
– Likewise, you should also avoid using a credit counselor unless it’s absolutely necessary. While it isn’t as bad as having a bankruptcy pop up, if you use a credit counselor to consolidate your credit, that will show on your credit report and it too can have negative impacts down the road. If you do decide to deal with a credit counselor to help consolidate your debt, stay away from those that demand cash upfront or request high fees.
– Debt settlement, even though it will show up on your credit score, might be the best solution for your situation. It’s a decision you’ll have to make based on the specifics of your debt. Basically, debt settlement is negotiating with each individual creditor to freeze interest rates and lower the overall amount that you owe. Most companies are willing to do this. Just understand that they aren’t doing this out of charity or goodwill to mankind; they’d prefer to settle for a little less money if it’s guaranteed rather than hounding you for the whole sum, which they may never receive.
– And the single biggest piece of advice to take to heart if you’re in debt and can’t seem to climb out of the hole is you need to take a long look at your spending habits. If you have $15,000 in unpaid student loan debts, don’t go to the movies on a Friday night and put $10 on your credit card. Do this once a month for a year and that’s an extra $120 in debt right there. And stop dining out…I mean, like, completely. Pack your lunch, brew your morning coffee at home, and explore the delicious realm of cheap yet savory homemade stews.
Whether your debt is your fault or not, you are now in this situation. And it’s these little expenditures – $30 a month for coffee here, $20 a week for lunch there – that add up quicker than you realize. Learn to stay home and connect with family and friends for entertainment. Visit your local library and parks. Your primary job when you’re in debt is to limit your spending to the absolute minimum, save enough to pay off all your debt, and then keep on saving.
Like I said in the beginning, ridding yourself of debt is not easy. But it can be done. And if you’re tired of being beholden to banks, creditors, and the other breeds of legal loan sharks out there, start shrinking your debt today.
