Debt can wreak havoc on you and your family. Even if you think you can handle it, you’ll often find that debt overwhelms you. You can even find yourself in a situation of wage garnishment where your earnings are withheld to pay off outstanding debts. However, there are steps that you can take every day that will help you to make a dent in your debt. Even if you cannot pay it all off at once, making these simple moves will help you regain control and get you and your family on the right track. Some are preventative, while others will help you keep your debt from getting worse. But they are all simple and useful.
Read Your Mail
If you’re the type of person that ignores your mail for days at a time, you could miss important information. Many companies will contact you about your debt through the mail. While some of these are scams, many are real. Depending on the type of debt you hold, your doctor, credit card company, or even the government might try to reach you. The IRS conducts three different types of tax audits: field audits, office audits, and mail audits. If you are being audited and don’t open your mail, you could get in big trouble.
Pay with Cash
As much as possible, you should pay for purchases with cash. Cash keeps you on a strict budget. Once it is gone, it is gone. There’s no way to overspend when you only have cash. While this might not be realistic for all situations, it can be very useful for things like grocery shopping or spending for fun. Keeping some cash in your home is a good measure for emergencies anyway, but you should make paying for purchases with cash part of your daily routine. Then you won’t be tempted to put unnecessary purchases on your credit card.
Stick to a Budget
You need a budget. You need to know exactly how much money your family spends each month and how much you bring in. Otherwise, you won’t know how much you can afford to spend. Sit down and make up an honest budget. Consider all of your expenses. Some will be the same every month while others will be more flexible, such as groceries. If your expenses are too high, your budget will show you how much you need to earn in order to make up the difference. Check out our 5 steps to a perfect mid-year personal budget review.
A budget is useful for everyone, but it is extremely useful for people on a limited income. About 8.2 million people receive disabled-worker payments from Social Security. In some cases, it goes directly to them. However, 104,000 spouses and 1.4 million children receive them to help their family. If you rely on a small income like that, you have to know where it is going in order to avoid building up debt.
Don’t Carry a Balance
If you have to use credit cards, pay them off at the end of each month, or at your earliest convenience. There are indeed benefits to using credit cards. Many have rewards programs that you can take advantage of. Cashback programs, discount opportunities, or free airline miles can save you a lot of money if you use your credit cards wisely. However, you should make it a priority to stay on top of your payments. Always turn on autopay. If you allow a balance to stay on your card each month, you’ll end up accruing interest that will quickly wipe out any cashback or point received. Your carried balance may also be reported to credit agencies and have a negative impact on your score and debt to income ratio.
Having uncontrollable debt can be devastating. It can be difficult to clear your mind when the reminders are part of your daily life, and you may feel overwhelmed. Take it one day at a time, and rather than hoping for a miracle, think of creative ways in which you can put your skills to use and bring in additional income.