A Debt Plan
If you have huge debts you need a solid plan to tackle it all. The best system is a simple step-by-step plan that keeps you out of overwhelm:
Find out how much you really owe. Look at all your bills and read a copy of your credit report. What do you owe, to whom, and by when? Make a list.
Drum up some support. Debt is stressful and having someone to talk to is very useful. Build a support network of friends and family you can turn to as you pay down your debts.
Budget. You need to keep track of what you spend so that you can funnel more towards your debts until they are paid off.
Start an emergency fund. Don’t just put every penny towards your bills. Set aside at least a few months’ worth in a savings account. Otherwise, you’ll just end up in more debt with the first emergency.
Cut spending, increase income – or both. If the debt is bad, you may need to take a second job or stop all unnecessary spending for a while.
Consolidate only if you can avoid new personal loans and credit card charges. Keep in mind that consolidation will only work if you have good enough credit to get a decent interest rate and the discipline to stop all new debt completely.
Dip into savings to pay down debts, but avoid tapping your emergency fund, retirement plan, or home-equity loans. Unless you really nip your debt habits in the bud, it’s easy to deplete your long-term security net and get into even bigger debt all over again.…
6 Ways to Overcome Feelings of Deprivation When Saving and Paying Down Debt
While saving money and paying down debt are important financial goals, it can be challenging to resist the urge to spend money on things you want but don’t necessarily need. Here are some tips to help you fight feelings of deprivation when you are saving and paying down debt:
1) Set Realistic Goals: Setting achievable goals can help you stay motivated and avoid feeling overwhelmed. Break down your goals into smaller, manageable steps, and celebrate your progress along the way.
2) Create a Budget: Having a budget can help you prioritize your spending and make sure that you are putting your money towards your goals. Include some room for discretionary spending, so you don’t feel deprived.
3) Find Frugal Alternatives: Look for ways to save money on the things you need, such as groceries, household items, and entertainment. For example, you can try shopping at discount stores, using coupons, or finding free events in your area.
4) Practice Gratitude: Focusing on the things you already have can help you appreciate what you have and feel less deprived. Take time each day to reflect on what you are thankful for.
5) Find Support: Surround yourself with people who support your goals and encourage you to stay on track. You can also seek support from online communities or financial counselors.
6) Reward Yourself: When you reach a milestone or achieve a goal, treat yourself to a small reward. This can help you stay motivated and feel less deprived.
Remember that saving money and paying down debt can be challenging, but it is worth it in the long run. With some effort and determination, you can achieve your financial goals and feel more secure and in control of your finances.…