Do you feel like your debt is a ball and chain around your life? Perhaps it feels like the more you struggle to get ahead, the further behind you fall. Although, it may seem more likely that you'll buy a condominium on Mars than ever be free of debt, there are a number of strategies you can employ to help eliminate your debt. The first is to change your way of thinking and get rid of debt-centric philosophies.
It is so tempting when running low on cash to take out a cash advance on your credit card, but the minute you have that cash in your hand you're paying interest on it. Most credit card companies give you a month before they start charging interest on purchases, but with cash advances you start paying immediately. Not only that, but interest rates tend to be higher on cash advances, as high as 26% (sometimes more on department store cards). In addition, you will be charged a cash advance fee anywhere from three to six dollars per transaction. That means that if you take out $1000 in cash in a year and it takes you a year to pay it back, that $1000 could end up costing you an additional $280-350 per year. That's a significant amount of money going straight to your debt load.
Who doesn't like living in a funky condo downtown, or a cute home in the 'burbs? Both are terrific ways to live, if you can afford it. It may be time to face the facts; if your debt ratio is too high, you may need to find a cheaper place to live until you get your finances fixed up. If you are single and paying $1500/month for a swanky pad, consider getting a roommate to split expenses, or move to a lower rent area. Don't discount moving back home. Free meals and free rent for a year or two could be exactly what you need to get your debt under control. If you own your own home, consider bringing in a boarder. An extra $500-600 per month will help pay down your credit cards pretty fast. If you have a fair amount of equity in your home, then consider selling, paying off your debt with the profit, and buying a smaller place.
Far too many people define themselves by what they have rather than who they are. Owning the latest phone does not make you admirable; it makes you broke. There is no reason, other than prestige, to replace your electronics every year. Imagine the money you will save if you commit to having your phone, computer, and tablet last at least three years. If they break down during that period, get them repaired. There are shops that debt-free people go to that repair all kinds of stuff. Also, look at your other unnecessary expenses. If you own a snowboard and only went snowboarding once last year, do not buy another one. In fact, sell the one you have and pay off a credit card. You can always rent one if necessary. In addition, the little purchases add up. Don't buy new clothes unless you need them, and always buy on sale. It is ridiculous to pay full price for a pair of jeans or a sweater. They all go on sale eventually. One trick to avoid impulse buying is to never buy something the day you first see it. Go home and think about it. More often than not, you will never return for that item.
Getting in debt was easy; getting out is far more difficult, but it is possible. You need to change your way of thinking and practice a lot of self-control. However, the feeling you'll have after that last credit card is paid off and you do not owe a cent of money is worth the struggle. A life free of debt is less stressful and more productive. You will be happier and healthier, and so will your finances.