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February 12, 2020

Be Debt Free and Save For The Future

It was reported in 2019 by the Pew Charitable Trusts that eight out of ten Americans are in debt. Debt does not discriminate. There are as many retirees in debt as there are young people.

There are ways out of debt, but it requires steadfast discipline. It is important to remember that you will not need to eat peanut butter and jelly sandwiches instead of dining out occasionally. You can still invest in your future. You can continue to save and place your money in stocks that are doing well in the market. This includes fashion stocks that are proving to be quite a lucrative investment strategy.

Debt doesn’t mean that you don’t know how to manage your money. You can find yourself in debt for other reasons. This can include medical costs or the cost of living catches you unawares. Other reasons are identity theft, school loans, or failed investments. No matter your age or the reason debt occurred, there are get-out-of debt tips that can help everyone.

You must identify your debt and be prepared to make a personalized plan to be debt-free. Yes, taking a realistic look at debt is never easy. It takes discipline and diligence to perhaps make a lifestyle change to help you change your mindset. You may need to change your spending habits and incorporate more frugal systems.

Here are five steps to help you eliminate debt and start investing in your future.

Impulsive Buying
Many people buy impulsively. If we become sad, or to celebrate, we buy. If we are lonely, we buy, or if we see what we perceive to be a bargain, we buy. Stop impulse buying! If you don’t have the income to support your buying habits, you are headed for debt. Life is filled with uncertainties. Therefore, we need to save money for an emergency. Remember that excess spending comes with accrued interest which makes your impulse buying a lot more expensive.

The Dreaded Budget Action
A budget is not a curse word. It is a plan of action that will help you become debt-free. Will it happen overnight? No, budgeting is one step at a time option. You should make a list of both your income and track your expenses. When you see income and expenses side by side, you’d be surprised at how much you spent even in one week. Look carefully at your expenses and in your wisdom—decide what you can eliminate.

For example, how often do you eat at fast-food restaurants? How often do you go out with friends? How much is it costing you? Set that amount of money aside to apply to a bill. When you do this for only a month, you will see big monetary savings that will help your debt circumstances.

Credit Cards
Credit card debt is a societal problem for people of all different levels in life. Many cards carry an interest rate above twenty percent. If you are using your credit card to buy groceries or pay a bill, stop right now. What do you owe in credit cards?

Contact your credit card company and ask about your current interest rate. Ask them if you can get a lower interest rate. Many companies will oblige and will work with you. Also, you have probably heard on TV ads, to move balances from a high percentage rate to a lower credit card percentage.
As hard as it may be, there is an advantage to make your monthly payments on time. This effort will help keep your credit score in good standing. Use good spending habits and use your credit cards only for emergencies.

3Extra Income
There is no shame in getting a side hustle. Many people are working two jobs to get out of debt. Become a driver for one of the ride-sharing companies. You can also find employment with a food delivery company which is very popular today. Whatever you decide to do, understand that it has a necessary purpose in your life—to be debt-free. A second job is a small sacrifice in giving up some weekends for the extra income that will help you get out of debt.

A Loan
Many financial advisors don’t like this word when you are in debt. But they aren’t in your shoes. If you can find a personal loan with a low-interest rate, then apply. A personal loan or a home equity line of credit can carry low-interest rates, especially lower than credit cards. Personal loans can help to expedite a debt restoration plan.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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