Digging Out of Debt - Day by Day

Why Are You In Debt?

There are many reasons today that someone might be in debt. Some factors out of our control (sickness in the family, loss of job or income), but many are related to the ways we live our lives each and every day. Most Americans today that are in debt are there for one reason alone - because they have lived beyond their means. Before the 1950's the only thing the average American ever bought on credit was a home. Today, in 2014, the average American holds over $7,000 in credit card debt, and that number is rising.

A Small Charge Here and There Adds Up to Big Numbers

Before you can dig yourself out of the credit hole, you need to identify how you got into debt in the first place. Many people put themselves in debt by purchasing "big ticket" items that would normally be unaffordable as a single payment. Ask yourself this simple question: "Is it less expensive for me to buy a $1,500 couch by saving up for 4 months and paying cash or buying it now with my credit card and paying it off in 4 months? Other people put themselves into debt by "nickel and diming" their way with small purchases that add up over time. New clothing, expensive meals and other extras - all of these things add up over time. Couple this with small minimum monthly payments on your card, and you've got a balance that continues to escalate.

Getting Out: The Same Way You Got In, Step by Step

Make a list of all of your monthly expenses and prioritize them. Ask yourself the hard questions of what is necessary and what is not. Do I need 235 cable channels? Should I make my own coffee instead of paying $3.50 a cup every morning? Most people are very surprised when they realize how easy it is to do without some of the creature comforts of life when trying to get their finances in order. And here's the important part: most people don't realize that it's not the big expenses that use up so much of our income; it's the little ones. Did you know that the average person can save over $250 a month by bringing their own lunch to work rather than ordering out? Imagine if you had that money to pay towards your mortgage, student loans or credit card? Life would seem much easier all of a sudden. Make sure when you budget your money to be realistic, build in a little fat for incidental costs- that way you're covered.

Stick to your budget and at the very least, pay more than the minimum balance each month while at the same time not using your card. If you need to use the card for an emergency, try to pay that expense in addition to your monthly budget so you stay on track. Perseverance is key, and after you've made 6 solid payments, you'll start to see that balance go down - and that should continue to motivate you until you're done and debt-free!

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