It’s not hard to find yourself becoming overwhelmed by debt, but the best thing to do is make a plan to tackle it. Firstly be rational and don’t panic, you have placed yourself in this situation with decisions of your own. Acceptance is key to dealing with it.
It’s a good idea to start by dealing with debt that has the most interest as in the long term this will really make your bank account run dry. Even though it may not be your biggest debt, such as your $30,000 student loan; it’s interest free. Look at your high interest credit card of $4000 and the amount of dishonour fees charged from avoiding this, but seeing it grow each month. Why not take stress off yourself and take infant steps? Just make the minimum monthly payment and get that account out of negatives.
Paying off a credit card can sometimes feel like you’re paying for nothing and giving your money to the wind, as the pleasure of purchasing $200 shoes and $100 beer rounds a month ago has worn off. You have lost the shoes on the weekend, and you can’t even buy yourself a $2 beer at Tuesday pint night.
Clear the negatives, literally clear your bank accounts negatives, use that emergency fund to make your accounts equal zero, by cracking those credit cards in half with some hugely mustered up determination. Maybe I am being dramatic…. you’re a spender, I’m a spender. But baby steps, lower all your credit card limits and overdrafts.
PAY your bills, you only leave it until collections is calling you with an extra $1000 to a $200 Vodafone phone bill. It’s like risking not paying a $2 parking ticket and ending up with an $80 fine, paying it at $10 a week for the next 8 weeks. It’s just not worth it.
Debt is derived from avoiding consequences; we like to think we have free money; as we swipe and enter credentials into an online store. Now it’s time to deal with those consequences. Everyone has their own personal limit of avoidance, whether it be the 5th letter from the bank for an overdue payment or cards declining because you didn’t transfer enough from your savings account. Start somewhere, let your focus be to make yourself feel at ease with your finances.
Once you have made a plan to tackle your debt and start putting it into action, things will begin to get easier. These habits will continue to benefit you throughout your life, as financial literacy is a skill everyone should prioritise. Rome wasn’t built in a day, but the sooner you change your spending habits for the better and attack your debt, the soon you can start spending that money on yourself again!
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.