The bills keep piling up. The collectors are calling, and your paycheck just will not stretch far enough. Perhaps you want to start living within your means and stop paying those high percentage rates. Whatever your reason--and no matter how dire the situation may seem--you can pay off your debts.
Effects
Being in debt affects you in several different ways. If your debts are more than you can keep up, your credit will suffer. This can mean you cannot purchase a car or a house. If your credit is bad, you might not be able to take vacations (you need a credit card to rent cars or book plane tickets). Many businesses now check the credit of potential employees. If you have bad credit you might not be able to get a good job. The effects of debt also include depression, stress and marital problems.
Types
It might sound funny, but not all forms of debt are considered "bad." Debt that creates value is actually considered "good debt." For example, a mortgage, business loan or student loan might be considered good debts. It is also important to consider that, in order to qualify for these types of loans, you usually must have some a good credit history. To obtain any credit history you must have incurred--and paid for--some past debts in a prompt and responsible way.
Time Frame
Becoming debt-free definitely does take time. How long it will take depends on a number of different factors, including the amount of your debts, the amount of your income and your living expenses. Once you have established a budget, you can begin to set goals. Start with a long term goal and a final goal. Break that down into attainable, measurable short term goals. Reaching your small goals on the way to your ultimate one will help encourage and inspire you.
Considerations
Make a list of all of your debtors and the amounts owed. Rather than paying a little extra each month on all of your debts, begin by focusing any extra cash you might have on your smallest debt. It does not matter what type of debt it is, just direct any additional funds to that item. After you have paid it off, you can cross that one off of your list. This will help you attain the mindset that it is, indeed, possible to reach your goals.
Prevention/Solution
Carry a small notepad with you wherever you go. For one month, keep an account of every purchase you make, even if it's fifty cents for candy. At the end of the month, look at your list and be completely honest. Figure out which items were necessities and which items were impulse buys. Find every way possible to stop spending on things you do not absolutely need. Find ways to reward yourself that do not cost anything. Reward yourself with a warm bubble bath or a trip to the library. Being free from your debts will be well worth the effort and sacrifice.
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