Seeing Red

Often times when a couple is forced to face an enormous debt, the task seems too daunting to tackle. This can lead to feelings of resignation and impede the progress of returning to the ‘green’. Admittedly, seemingly insurmountable debts can take time to recover from, but they can still be handled. The important thing is to keep your wits about you when facing the intimidating task and sticking to a well-constructed budget.

The first step in tackling debt is knowing exactly how much debt you’re in. While collecting outstanding bills and ‘last notices’ it may be easy to know that you’re in debt, but putting a number on the amount will help you put your goal into perspective. Once you’ve established a number, it is time to take a close look at all of your expenses. Make sure to have all credit card receipts, all bank withdrawals and all bank statements at hand (expenses) alongside all deposits and pay cheques (income). It should already be evident that you’re overspending, but the key is to know where. Moreover, if you’re truly serious about dealing with your growing debt, you must be willing to alter your lifestyle in order to accommodate what you can afford. Often times, it is getting used to a particular lifestyle or trying to ‘keep up with the Jones’’ that puts people in debt in the first place. So once you’re expenses are before you, start cutting costs.

No expenses are truly ‘fixed’. For example, though owning a house ensues that you must pay a mortgage, the amount of years can easily be changed by the frequency of your payments. Not only will bi-weekly or weekly payments cut down the amount of years on your mortgage, but it will also diminish the amount of interest that you must pay towards your house. This same principle applies to car payments and credit card payments. When it comes to credit cards, lowering your interest can be a simple matter of talking to the credit card companies. If you are able to show them a few months of consistent payments, they may be willing to lower your interest rates. As a result, your credit score can slowly begin to improve. If you do manage to redeem a bit of your credit score, you can use this improvement to lower interest rates on your car payments. As for more practical expenses, such as food, clothes and miscellaneous items, it is now your responsibility to cut these costs by shopping smartly. Countless individuals spend too much money on food and clothes; both of which can be purchased when on sale. Collect weekly flyers in order to know what foods are on sale and make your own meals rather than eating out. Normally, home-made meals are cheaper and are more nutritional than fast-food. As for clothes, when in debt you might want to consider forgetting about the name brands. Instead, look out for sales and remember, you don’t need a wardrobe large enough for an army, there are only seven days in the week.

No doubt, getting out of debt is a long and strenuous task. However, while saving money (with the aforementioned tips) for repaying your debt, it is equally important to save back money for emergencies. It is important that every family have an emergency fund, that way, when you do return to the green, and ‘life happens’ you’ll be able to deal with it without returning to the red. Even fifty dollars a month can form a substantial amount of money for unexpected events, ensuring that you never have to go back into debt. All in all, with faith, and a little perseverance, soon enough you’ll be seeing nothing but green.