If you think that's an overstatement, ask yourself the following questions:
If you answered ‘yes’ to even one of the above questions then your life is being negatively affected and managing debt is a priority.
It’s not very difficult to run up considerable debt without a second thought nowadays. Consumerism and over spending in the instant gratification culture we live in entices us to buy now, pay later… and boy do we pay!
Personal and household debt has become so common nowadays that we sometimes don’t realize what a trap it is. When we use credit cards or personal loans to pay for things, it distances us from the act of spending actual money. There’s a feeling of it being OK because we’ll deal with it ‘later’ when we think we’ll have more money.
Being a free spirit means that the temptation is huge. Using your credit card to jet off on a spontaneous trip to walk with Orang Utans, or fly overseas to attend your friend's 50th (40th or 80th... whatever) on a whim (something I did - such fun!!)
But the truth is, if you can’t buy it without credit, you can’t really afford it.
It costs you so much to be in debt, some of which you may not immediately realize. The monetary cost is easy to understand – you pay more for your purchase by paying interest on the original price, and the ‘easier’ the repayment terms, the more you pay.
But what about the physical and psychological costs? Studies have shown that high levels of debt can cause depression, stress and low self esteem just for starters. This often leads to physical health issues as well. So it’s REALLY important that you deal with this, no matter how difficult it may seem.
But don’t despair! Even if you’ve been struggling with debt for a while, it is possible to get your debt under control and get your life back.
The first step to managing debt is acknowledging your part in this situation…
There’s a popular belief nowadays that the credit card and loan companies (read ‘banks’) have taken us for a ride, they’re greedy and are preying on our desire to have more stuff.
The reality is, this mindset does not serve you in any way and is not going to help the situation.
Think about it – before you were given the credit card or loan you agreed that you would pay back the money you borrowed. You also knew that you would be charged interest each month on the outstanding amount.
There is nothing to be gained from blaming others – even if they did use clever marketing to ‘get’ you to apply for the card… Playing the blame game doesn’t empower you and only turns you into a victim.
The upside is that paying off debt is psychologically SO much easier when you actually take responsibility for it. Realizing and accepting your part in the situation will not only help you get through this, but also stop you running up more debt without seriously thinking about what you’re doing.
So, now we’ve cleared that up – here’s what you do next….
Breaking free from the burden of worry and stress brought on by debt will create the peace of mind you've been missing for so long. And the good news is - you don’t have to wait until the debt is clear in order to feel the relief, just setting up a manageable debt repayment plan will set your mind at rest and allow you to focus on other things.
1. Write down every single debt you have, how much you still owe, the interest rate and your current minimum monthly payment. Then total the monthly payments so you can see what you're currently spending on debt each month. You can devise your own sheet or download one here.
2. Decide how you’re going to tackle paying the debts off, what method will work best for you and how much you can afford to pay. You can get more information to help you with this, as well as download a calculator to do all the math for you on this page.
3. Create a written outline of your debt repayment plan – which debt you’re going to tackle first, how much you’re going to pay each month and your goal date for being free from that debt.
4. Once you’ve created your repayment plan - automate it - set up automatic payments each month and forget about them. Now you can start focusing on becoming a financially free woman instead.
5. Set some intermittent goals along the way to celebrate, perhaps buy yourself a little treat when the first debt is paid, or have a (cheap) night out as you cross the second debt off your list. It will keep you motivated, and in the long run paying off debt will be easier if you allow yourself a little fun along the way.
7. Stay motivated – use a vision board to remember WHY you’re on this mission and how it will change your life when you’re debt free.
8. Visualization – Visualize how you will feel and what your life will look like when you’ve paid off your debt. Read more about the power of visualization.
9. Find extra money to help pay your debt. You can sell some stuff (its probably what put you in debt in the first place so it’s kind of cool that it can help pay it off again), or earn some extra income to put towards your debt repayment.
10. When you're debt free - carry on going. When you start managing your debt, your ultimate goal is to be debt free – but rather than just making that your goal, decide what you will do with your new found freedom. Perhaps start learning about investing, or buying property and once you're debt free, instead of paying off debt you can start building wealth..
Managing debt will absolutely set you free to get on with your life with the peace of mind that your debt is soon to be a thing of the past, so don’t put it off any longer.
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