Recovering from financial turbulence is possible, even when everything looks bleak. For whatever reason, job-related issues or just a spendthrift attitude, your finances are in bad shape, and worse yet, this has created a dark cloud over everything you do. Contrary to popular belief, it is very possible to climb out of debilitating debt.
A short-term solution to remedying a bad debt situation is to draw on a consolidation loan, which can combine all of your existing debts. Loan consolidation can also be done through a low interest personal loan, which allows you to pay on existing debts at a much lower rate while not restricting taking out other loans, as is the case with the consolidation loan. However, paying down debt is only one step in getting your finances back on track.
Continue reading to learn how to become happier simply by freeing yourself from financial misery.
One of the first ways to get financially fit is to draft a realistic budget that covers all of your consistent monthly expenses. When creating a budget, include everything you spend money on, even that unnecessary trip to the coffee shop in the morning. A good way to tell exactly what you are spending money on is by saving your receipts for a few months. At the end of the month, calculate how much you spend on entertainment, food, personal necessities, and transportation. You will be amazed at the amount of money that is wasted in a month through frivolous purchases.
Once you have calculated all of your expenses and subtracted it from your monthly income you will have an idea of how much money is at your disposal in any given month. At this point, take your receipts and the calculations to determine where there is a waste. A simple comparison between the amount spent on each item like food, transportation, etc., and how much you have will tell you if you are living beyond your means.
More importantly, though, these receipts can be used to determine wasted expenses. Make a list of “needs” and “wants” and then use the “wants” as a way to start a savings account. This savings account should be used as a rainy day fund or as a way to work toward long-term financial goals.
Another option for the extra savings found after taking inventory of your incidental spending is to use this money to pay on existing debts. A common method for reducing debt is to pay extra on the lowest debt, and then when that debt is paid, use the extras to pay on existing debts. However, this really doesn’t work unless you don’t open any new accounts. The purpose is to free yourself from all obligations, so the money you do earn, you can keep.
Finally, to remain debt-free, develop a cash-only policy that will prevent you from falling into the debt trap. Not that you have to do away with debt altogether, but if you do have to take on debt, make sure you have a way to pay on the debt quickly to avoid paying on interest. Then, make some goals. Whether it is to purchase property, finance a long-term trip, or to open a business, these are financial goals that can help increase wealth in the future.
Overwhelming debt can really dampen a bright future. There are so many ways that finances in disrepair get in the way of even the common, most ordinary tasks, tasks such as making reservations and applying for employment. With a plan and a lot of discipline, even the worst financial situation can be brightened.