Are you struggling with debt problems and you do not know what to do about it? Before you raise the white flag and give up in favor of bankruptcy, let us look at the situation from a different angle. Maybe the key to tackling your debt situation is not on paying off the debt. Obviously, you still need to pay it off but maybe you should not focus on that.
You see, the problem with debt is not really with the money that you owe. It is more in the way we react to debt.
The truth is, debt is not really that bad. In fact, a lot of successful people have used it to help finance businesses and investments. When utilized properly, it can actually be a great tool to help you improve your financial position.
However, when it is abused, that is the time when debt problems can become destructive.
According to an article published on ZeroHedge.com, the consolidated debt of both the government and consumers have already reached the same level before the great depression happened. If we do not do something about our current debt situation, it might spiral out of control. We could end up with a shaky economy and ruined personal finances.
Before we go down that road towards financial ruin, let us think about how we can stop abusing debt once and for all. The truth is, we need to look within ourselves to figure out what we are doing wrong. Most of the time, our bad financial decisions lead us to accumulate too much debt. If you really want to get ahead of debt problems, you should probably identify the different excuses that you tell yourself to justify why the use of credit is okay – even when it is not.
5 excuses that will make it hard to get rid of debt
Do not get us wrong. This article is not about proclaiming that debt is bad. We strongly believe that debt is something that we cannot eliminate entirely. We need to continue using it because society made is a necessity through the existence of credit reports and credit scores. If you want to borrow money to buy a house (which is very hard to pay in cash), having a good credit history is necessary. At least, this is true if you want to have a low interest on your mortgage.
While that is true, it does not give us an excuse to use credit recklessly. There are ways that you can keep it from ruining your finances and instead, pave the way towards financial abundance. To do that, we need to change our mindset about credit use. Here are 5 popular excuses that we have in our minds to justify the irresponsible decisions that we make when it comes to credit.
Excuse 1: I use credit for the rewards.
The truth is, this is not entirely bad – but only if you can utilize it properly. Some people justify their use of credit by citing the rewards that they will get. In fact, an article published on Nasdaq.com revealed that 52% of consumers in 2015 said that they chose a new card because of the rewards program. This statistic is admirable but only if you can really utilize that reward. You need to educate yourself on the various rewards programs available and make sure you get a card that suits your lifestyle. For instance, a stay-at-home mother has no use for a credit card that provides travel rewards. This is a card that is best suited for business people. You have to realize that the rewards program is a way for credit card companies to make money off your credit purchases. No matter how appealing the reward is, if your lifestyle will not let you enjoy them or take advantage of them, then this is a poor excuse to keep on using credit.
Excuse 2: It’s on sale!
This is a classic excuse that can quickly escalate into debt problems. In fact, it is just like the rewards program of credit cards. You think you are saving money through your credit spending. This may be true but only if you will use the reward. In the same way, buying something just because it is on sale is not always a good idea. Even if you paid only 30%, you did not really save 70%. You wasted 30% – at least if you do not need that product in the first place. Besides, if you used credit for that purchase and you know that you cannot pay for it in full when the billing comes in, the interest and finance charges will put a dent on the money that you “saved” because of the sale. Think about that before you succumb to the temptation of buying something just because it is on sale.
Excuse 3: Everyone has debt.
The third excuse that people make when trying to justify the use of debt is the fact that everyone has it. According to an article published on NerdWallet, the cost of living grew by 29% while the income only experienced a 26% growth. When the expenses are bigger than the money coming in, how do you think we pay for the difference? That’s right. We borrow money. This seems to be the going trend because it is the only way that consumers can meet the rising cost of living. But even if that is the solution for most people, it does not mean you should follow suit. There are other ways to make ends meet. You can choose to live a more simple lifestyle so you do not have to spend a lot. Or you can earn more.
Excuse 4: It always works out.
Another excuse that consumers make is that it always works out. Having a positive outlook in life is admirable – but not when you are trying to solve your debt problems. You want to remain optimistic but not to the point of being reckless. Justifying credit purchases even if you know that you will have a hard time paying it off is just irresponsible. When it comes to your money, do not leave things to chance. You have to maintain full control so you can avoid financial problems in the future.
Excuse 5: I have a lot of debt anyway.
If you hear yourself making this excuse – you need help as fast as you can. It is like feeling resigned to your debt situation and giving up hope that you can get out of your debt problems. While it is hard, you have to do something about your debt. It is not something that will go away unless you do something about it. Do not add to your current balance if you do not know how to solve it in its present state. The bigger the balance, the harder it will be to pay it back. So stop using credit and find ways to pay off your current balance before you totally ruin your financial life.
How to use credit smartly
Solving your debt problems does not mean you will stop using credit forever. If your balance is too great, then yes, stop using it until you have paid off your debt. But this does not have to go on forever. You can still use credit but you have to learn how to use it smartly.
A lot of Americans believe that debt elimination is not possible. In some ways, that is true. You cannot turn away from using credit for the rest of your life. At least, this is true if you still have to buy a house or something just as expensive. The key to managing debt is not to eliminate it from your life. You have to learn how to use it to your advantage.
Here are some tips to help you use credit the right way.
- Understand the reason for the debt. Do not just use credit just because you do not have the cash to pay for the expenses. That is actually a dangerous reason. It will really lead you to debt. Make sure your reason for the debt is clear. Is it something that can help improve your financial situation? Is it necessary to help you improve your productivity at work? Think about these reasons and make sure they will help you meet your financial goals.
- Have the plan to pay it off. Another way to make sure that credit will be beneficial is when you are sure you know how to pay it back. There are various debt payment plans that you can look into. Just make sure that this is one of your requirements before you borrow money. Unless you know how to pay it back, do not use credit.
- Do not deviate from your plans. Whatever reason you have to take on the debt and the debt payment plan that you have in place, do not deviate from it. Follow through with the plan. The only time that you should think about another plan is when it is evident that the existing one is not working. Explore your options but be very careful when you are changing any of your original plans.
Here is a video from Credit that gives tips on how you can use your credit cards smartly.
