Everyone would like to have as many things as possible. However, even if you want a new car or a new house, or more clothes or jewelries, or whatever else you might think about, it’s better if you take second thoughts.
This is because there is always the possibility to lose yourself in a debt spiral. Do you know what a debt spiral is? A debt spiral is that period when you already have a debt that you can’t pay, but you take another debt to cover the first one. And so it goes, round and round, until you won’t be able to pay anything anymore.
Here are some tricks about avoiding this, as this can save you a lot of money and a lot of headache.
Review the Budget
This is the first step that you have to take in order to try to avoid a debt spiral. If you keep on borrowing money to cover your debts, then you are certainly facing a debts spiral, as your income can’t support all your debts.
It doesn’t matter what you have to pay each month – simply make a list of all the things that you are paying for. Note down the credit cards, the bills and the rest of the expenses. This will help you identify the route of your money – if they are not in your pocket, then they have to go somewhere. Identify what you have to pay each month – the rent, the credit card, the mortgage, the loan for your car, etc, and other expenses like food or going out.
It’s not easy to make this challenge, but you need to do it. So, challenge yourself to make some savings. For example, from your income, decide to make a 5% savings and don’t touch it. It’s not too much, but it will at least allow you to have some spare money for emergencies or other things that you might need without a notice.
If you are used to eating a whole piece of chocolate each day, cut it out in half and you will save from the start the money for 15 chocolates. Do the same if you eat regularly downtown or if you go clubbing at least 4 nights per week. This is not worth it, as clubbing is not always healthy, but cutting the numbers of going out will also help you save some money.
Learn to Cook
This is a whole new matter, but you have to starts somewhere. A lot of money is used for buying fast food or eating downtown. If you learn how to cook your own meals and dishes, you will save a lot of money. Many recipes are easy enough and they are also tasty, so get online and take a look at the plenitude of easy recipes that there are available.
The Biggest Debt
With these easy steps you should be able to stop the debt spiral. Now that you have managed to make some savings each month, see what you can pay off. Starts with the biggest debt and see if you can increase the monthly sum that you have to pay. If you can do it with 50%, then your debt will decrease and so will the period that you still have to pay for.
Seek Professional Help
If you can’t do it alone, it’s better to ask for professional help. There are many debt management companies that can help you get free of your debt spiral. However, just as you have read until now, they will make a plan for you that you will have to follow. It’s not always easy to do this, but it’s easier to make your own plan for savings and getting rid of the biggest debt than pay someone to do this thing for you.