If you have gotten into debt, you’re not alone. Many people all over the country get into debt, whether it’s due to a mistake they have made, careless spending, or something that was completely out of their control. Getting into debt is not the end of the world, so long as you get out of it! If you have been trying to get debt free, but you haven’t reached your goal, these could be the reasons why…
You haven’t got a plan – This is one of the biggest reasons why most people struggle to become debt free. A lot of people simply say to themselves that they will use any extra money to pay off their credit cards each month. But this attitude will not get you out of debt; you need a carefully put together plan. You need to determine your incomings and your outgoings every month. Once you have done that, give yourself a set amount to live off, and determine how much money you can put towards paying off your debt every month. This will give you a goal to reach, and you will have a solid idea regarding when you can reach your target of being debt free. It will make a massive difference.
You are juggling other priorities – If your goal is to get out of debt, this needs to become your number one priority. Everything else needs to take the backseat, from travel to buying new things. As fun as it is to buy the latest tech gadget or go on a vacation, these things will slow down your ability to make repayments, meaning you will stay in debt longer.
You haven’t learnt from your mistakes – This is the painful part, but it is really important. You need to sit down and assess where you went wrong. How did you get into debt in the first place? It is important to change your attitude towards money and your daily life, especially if you have been living above your means.
You don’t negotiate – A lot of people don’t realise that it is possible to negotiate the terms of their debt repayment. For example, if you have credit card debt, one of the first things you should do is call up the credit card company and ask them if they can provide you with a lower interest rate. Many people assume that a credit company will never agree to this, but you will be surprised by how many do. A lower interest rate could save you a huge sum of money.
You continue to use credit cards while paying them off – Many people assume that they will simply pay off the money they owe while also paying off their new expenses. In the end, they simply end up with more debt on their hands. It can be especially tempting to use credit cards when there are rewards like airline miles. However, no reward is as good as getting out of debt, so you need to stop using your credit cards if you are to pay them off.
You haven’t factored personal expenses into your debt repayment plan – The good news is that you have a debt repayment plan, so that is a great start. Nonetheless, if your debt repayment plan does not include personal expenses, you are going to fail to reach your targets every month. Your plan needs to be realistic, otherwise you are simply going to be setting yourself up for failure every month.
You are closing your old credit card accounts as soon as they are paid off – Of course, if the temptation is too strong to use your credit cards, then you should definitely close them to avoid getting in debt again. Nevertheless, if not, it is a good idea to keep these cards open. This is because the average age of your accounts impacts your credit rating. Every time you close an account, you are actually reducing the average age of your accounts, and this can, in fact, have a detrimental impact on your overall credit rating.
Doing it alone – Being in debt can be very lonely. While you may feel embarrassed, it is important to talk to someone. No matter whether this is a partner or a parent, they can help to shield the burden and you will feel like you have a weight lifted off your shoulders. Plus, you never know, they may be able to give you a helping hand along the way!