Once you get into debt, staying in debt is actually quite easy if you’re not careful. Debt can cause a lot of anxiety, and prevent you from building wealth in the near future. Here are the top reasons people stay in debt:
Reasons for Debt
- Gambling, so many different forms, including slot machines, racing, and casinos.
- Addictions like alcohol and drugs, even cigarettes are now unaffordable.
- Lack of discipline, not wanting to make sacrifices
- Compulsive buying, wanting the newest latest thing.
- Student loans
- Having to have that expensive car or the latest gadget
What To Do About it?
When you go along to the financial advisor, the first thing that they will probably say is to get rid of short term debt. That means the credit card and personal loans. The advisor will sit down and make a debt consolidation plan with you, and they may suggest that you roll a couple of loans into one larger one and work on getting rid of them (depending on your income). Or they might suggest getting rid of the smaller loan first, and this means dedicating as much cash as you can to the small loan until it is gone. They will also say that when you are trying to reduce debt the worst thing that you can do is to create more debt, so it is important to focus.
If you are a recovering spender, don’t worry, it takes practice. Leave your credit cards at home, so that you are not ready to swipe at the earliest opportunity. One of the reasons people stay in debt is that they can’t stop spending.
Discipline in Debt Management
You should prioritize paying off your loans and credit cards, as this will hold you back in purchasing a home, or any other financial goal you might have. So, look at ways of repaying it more quickly once you are in the workforce. It may mean living with your relatives or friends for a year and trying to get rid of the loan by taking a second part-time job a couple of days a week, but it will be worth it in the long run. Explore other ways of maximizing your income, you may be able to take on some freelance projects. Have a garage sale or list your items online and get rid of stuff that you no longer need for cash.
If you Suffer from an Addiction
If your spending is due to an addiction, the best thing to do is to get professional help. Once you have overcome the problem, you will certainly have a lot more money available every day. For example, a person that smokes five packs of cigarettes a week will save over $100 every month. This is a win-win situation, and he finds that he also feels a lot healthier.
If you want to beat that debt, make a plan, and the sooner you start, the sooner you will be debt-free. Sometimes it is better just to avoid impulse purchases, but there is always the thought that we might need it as a safety net.