There are more than a million words within the English language. Yet, there is one term that holds the power to make us near the state of frantic unconsciousness — debt. At first, it can be scary to have the four-letter expression attached to anything regarding our name. Though, as life moves on and it becomes more of a reality than some imaginable nightmare, we have to ask ourselves: What is debt, and why are we so afraid of it?
Since the current pandemic, The total U.S. consumer debt balance grew $800 billion, while the American household debt hit a record $14.6 trillion in the Spring of 2021. So, you are not alone and this is not the end of the world. Once you start to realize that is not the end all be all, you can begin to navigate throughout your life while dealing with it — reminding yourself that good and bad times can coexist. We can only find ways to keep moving after affirming that we are unstoppable despite our biggest obstacles.
While debt is an obstacle, it is not a dead-end. There are a plethora of ways to journey past this situation before it becomes worse than it started — and lucky, BAUCE is giving you ten.
Be a BAUCE on a Budget
Debt is defined as a deferred payment, or series of payments, which differentiates it from an immediate purchase. There are many common causes of debt, one being bad budgeting. If you’ve stumbled into this predicament ultimately because you have butterfingers when it comes to cash, setting up a system of how and when you are going to spend your money is crucial to successfully crawl out of this financial hole.
When you budget your money correctly and follow the guidelines you’ve put in place, you can work toward creating a pipeline to pay the debt you do owe. Splitting amounts over a span of months is realistic, efficient, and a great habit to start with.
Keep it Simple
While taking a lunch break out at the new spot near your job sounds more exciting than eating a lunch you’d already prepared at home — it’s reasonable. It’s time to start saving and put a pause on all the splurging. Saving money doesn’t have to be boring if you’re creative. You can try a new recipe at home from a restaurant you liked and meal prep it for the week. You can have a luxurious spa day with a sheet mask, some iced water, a bomb playlist, and a cheap candle. Life is as luxurious as you want it to be — no matter the cost.
So, if you can, live luxe on a limit until you’ve conquered your debt. You might even come around to like it.
Save it for Later
After budgeting and cutting down on your costs, it’s time to ensure that all your work doesn’t go to waste. Sometimes, we aren’t as disciplined as we’d like to think we are. So, in cases like such, we must take measures to stay prepared and responsible at all times.
Setting up an automatic savings account with your bank can be a heaven-send. Every time your direct deposit hits your account, a little can go back into savings. There are also tons of applications that can be used to save money for a rainy day such as, Digit and Peak Money.
More Money, Less Problems
Discipline is about practice affecting a mindset. Most people like to swipe their cards because the act of doing it “doesn’t count” or doesn’t hurt as much, because you can’t see it. You tend to forget how much you’re really spending when you rule out having cash within your hand. Doing this can help emphasize how bad your spending habits may be, while also leaving room to learn improvement.
Create a Game Plan
You can’t go into a problem without a clear solution. This is why planning for everything is key when you want to attempt the process of taking control of your debt. Choose what way you’re going to tackle paying off the money you owe.
Will you pay off smaller debts first, or will you begin with the ones with higher interests? Whatever you decide to do, creating a strategy goes hand in hand with budgeting so you can prioritize your funds toward the things you plan to do.
Call Your Creditors
It’s okay to ask for help when dealing with debt. You are not the first person to experience it, neither the last — this is completely normal. Call your creditors and inquire if there are any internal hardship programs. They may be able to provide a huge amount of help by temporarily lowering your interest rate to allow more of your monthly payment to go toward the principal.
While it may be nerve-wracking at first, confrontation is essential to facing any problem head-on and conquering it. Hiding from any issue doesn’t make it go away, and being hesitant to take the steps necessary to fix it only prolongs the process.
Take it One Bill at a Time
One of the worst things you can try to do is divide and conquer when tackling multiple forms of debt. That leaves more room for each to loom out over time as you try to pay each one. Take it one step out of time so that you’re making progress to check each off your list. Try to tackle the card with the highest interest rate. When you’ve got it under control, take on the second-highest and work your way down.
Create an Emergency Fund
Some cases of debt begin with not being able to afford the emergencies that come our way. It’s best to start as soon as possible to put back some coins for emergency events. You’ll never know when a natural disaster or unfortunate accident will creep around the corner, and you wouldn’t want a broken-down vehicle putting you further into the hole.
Creating an emergency fund can help you when you’re dealing with debt so that you don’t find yourself taking on significantly more. Wells Fargo stated that a good amount of money to put back for emergencies would be about three to six months’ worth of expenses at the least.
Debit, no Credit
When you first find yourself in debt, it’s important to reflect on all the choices you’ve made that could have contributed to the outcome. A common issue among many being credit card irresponsibility. If you start your journey with a stone-hard budget and save for emergencies, using a credit card should become something that is no longer dependable.
Falling back under the temporary cushion that credit cards provide us is never safe, because one day, the air runs out. Then, we’re left with on our butts, wondering how we took such a tumble. Start using debit cards if you’re used to swiping, or tap into your saving accounts. Short-term sacrifices will always turn into long-term pay-offs.
Don’t Beat Yourself Up
While it is important to hold ourselves accountable to truly show change, remember that you are not the only person in the world dealing with debt. 80% of Americans are entangled within the web debt that seems inescapable. Continually blaming yourself or comparing yourself to others will not solve your problems. Generally, we show people what we want them to see — creating an image of ourselves that we deem presentable for the world.
Debt is normal, and as long as you see it as something that you can overcome — you will. Know that somewhere, out there, there is a community of people just like you wondering how they can sail the unpredictable seas of debt.
And that community stretches out to here.