Struggling with debt? OnSugar blog Beauty and the Budget gives us some great tips to managing debt.
Remember this old commercial? It's hilarious, and so true!
These frivolous spending habits certainly apply today. Think about it. You know these people—they're your neighbors, coworkers, family members, or maybe it's even you. You're to a point that you are sinking yourself into an unrealistic amount of debt. It's normal to have a house loan, car note, insurance, and student loan debt. Where we get ourselves into trouble is when we have a house and a car that we cannot afford. Let's face it, in our society we aren't just keeping up with the Joneses anymore — we're trying to keep up with the Kardashians! And that, beauties, is completely unrealistic.
Now of course, I'm not trying to lecture. I've seen what credit card debt can do, and I'm currently struggling to pay my student loans off when I don't even have a job with a decent (read anything above $25,000) salary! I know your pain, and it's extremely tough. But the best thing we can do is to not stress about it. Instead, we should learn to take a rational approach to handling our debt and getting it under control. Don't worry about having to get it paid off now, now, now! The key is learning to manage your debt.
So let's say you have a normal amount of debt or an abnormal amount of debt. Whatever your case, you have debt. Now, let's get it under control using these six steps:
- Take a rational and logical approach to creating a budget. Money doesn't grow on trees, so it may not be realistic for you to pay $100 extra on a credit card every month in addition to your minimum payment. However, if you are just spending that extra money on lattes or manicures . . .
- Figure out where you can save (i.e. going out to eat, manicures, etc.), and where you can spend. For example, you can probably afford to pay that extra $100 towards one bill every month if you are only going to spend it on something you don't need. This means that you need to . . .
- Find a balance between your needs and your wants. In some cases, you may have to cut down on most of your wants in order to pay off your debt. However, keep in mind that . . .
- You still deserve a treat every now and then! It's completely unrealistic to think that you can go an entire month (or more) without buying something nice for yourself. First of all, if we all stopped spending to pay off our debt, the economy would go down the drain even further. Secondly, if you are accustomed to buying cool techie gadgets every month or lattes every morning, you don't always have to give those things up completely. But you might (and probably do) need to cut back drastically. And when you do decide to treat yourself . . .
- Can you really afford it? Other than small treats that are less than $50, let's say you're jonesing for a bigger purchase, like a new Mac. Sure, Apple products are top of the line and worth every penny, but will you be in a bind after you buy it? I made the same mistake two weeks ago after buying an iPhone. I've been struggling ever since I bought it, and even though I love it, I shouldn't have been so impatient. So if you can't afford that big purchase . . .
- Create a savings fund for big purchases. Never, ever decide to get yourself under another note or accumulate your debt further. Donate 20 bucks (or whatever) every week to your savings fund. When you finally have all of that money together, see if you still want to make that purchase or if you think you can spend the money elsewhere. You'll find that when you work so hard to save for something, you will either really appreciate your purchase or decide that your wants have already changed.