Debt is inevitable as we get older, as we need money for mortgages, cars, house expenses, and other things that could be considered a necessity.
But do we have to remain in debt forever? Not really! However, many of us fail to rid ourselves of debt because of the mistakes we will mention in this article.
#1: Living without an emergency fund
If you don’t have an emergency fund, your finances could take a massive hit if disaster strikes. For example, your car could break down, you might lose your job, and there could be a maintenance issue within your house that requires a ton of cash to put right.
If you have an emergency fund, you can use some or all of that money when something goes wrong. But if you don’t, you might have to take out another loan or use money that would otherwise have been spent on your existing loan payments.
So, what should you do? Start an emergency fund, of course. Put money aside each month in a savings account or a jar in your house, and don’t touch that money unless you need it for an emergency, i.e., not a takeaway or a new pair of shoes!
#2: Not asking for help
You don’t need to handle your debt situation alone. Sure, you might be a little embarrassed about asking for help. Still, as most people have been in debt at one time or another, you should experience sympathy rather than judgment when you speak to another person about your situation.
Reach out to friends and family for both advice and financial help. Alternatively, speak to a debt charity or an insolvency practitioner if you need professional help with debt.
The sooner you reach out, the better, as you’ll be on the road to financial freedom when you have found a way to dig yourself out of the debt trap you have found yourself in.
#3: Living beyond your means
It’s important to live below your means and not beyond them. To do this, you must determine what you must spend each month on bills and debt payments and then manage your spending accordingly.
If you go over with your credit card when spending your monthly earnings, you will likely go beyond your means and risk further financial jeopardy. By this, we mean you will have less money to pay off your debts and run the risk of needing another loan or credit card if you cannot make your existing debt payments.
For advice on this matter, follow these tips on how to live below your means.
We all make mistakes. To err is human, after all! But when those mistakes cripple our finances, we must take stock of our lives and make a few changes.
So, consider your situation. If you’re struggling to get out of debt, it might be that the suggestions we raised in this article relate to you. If so, follow our advice to improve your chances of escaping debt sooner rather than later.