Debt can be a very tricky thing. If you are already in debt, you are no doubt already aware of this fact. But many people that aren’t currently in debt will wake up one day surprised that they are.
There are many reasons for this. Most of them, however, can be pared down to overspending and overcharging with credit cards. In fact, credit card debt is one of the most common debts in the United States today. Rather than credit cards being used primarily for extra purchases such as vacations and entertainment, they are now used in large part to fund everyday expenses like utilities, groceries, and gas.
Credit cards, while helpful, are easy to abuse and overuse. The availability of ‘funds’ on them can lead to you spending more money than you actually have. Some of the time this is rationalized (“Oh, I’ll be able to pay this off soon”) and sometimes you just get caught in a whirlwind and end up making credit card purchases without even thinking.
Add other types of debt – like student loans, mortgages, and auto loans – on top of the debt created from credit card spending and it is easy to see how the problem of debt control can become so huge. When debt after debt piles one on top of the other, your debt as a whole can quickly spiral out of control.
In order to keep things under control and have power over your debts (and not the other way around), you should keep the following tips in mind. They are the basics of debt control, if you will, and will help you manage your debts.
Keep Track of Your Expenses
The single most important basic of controlling debt is keeping track of what you spend. The absolute easiest way to do this is to keep track of your expenses (and your income). Recording every cent that you spend and reviewing this is essential to the process of seeing where your money is going. Furthermore, it can help you spend less money as oftentimes, especially when using a credit card, you are really spending more money than you might think.
Create a Budget Plan
Another essential of controlling your debt is knowing what you are paying for and only paying for the things you want to pay for. In addition to helping you keep debts to a minimum, credit card or otherwise, a budget plan can help you decide how much debt you are willing to carry.
In many instances, debt is all but unavoidable, such as when financing a new car. But before settling on an auto loan, you should look at your budget plan (which should include your income and expense records) to see how much debt you will be able to carry and how big of payments you will be able to make. It is important to include interest rates in your calculations. Furthermore, it is important to avoid making only minimum payments on your debts as this is ultimately very expensive no matter how good of terms your loan has.
Take Control of Your Debt
As easy as it is to spend money and use your credit card, it can be hard to actually make this money and pay off credit card debts. For this reason, another basic of debt control is actually paying off your debts by controlling them and understanding them.
All of this starts with awareness. Being aware of your debts and how much every swipe of the credit card will cost you can make you think twice about using your card. Reviewing your expenses regularly – especially your credit card statements – can also help ingrain it in your head that your credit card is not to be used without thought.
A good number of people actually could benefit from destroying their credit cards. If you can’t use it, you can’t use it, right? In fact, many experts even recommend that you only have one credit card, and that you use it only in emergency situations. All of this is even more important if you’ve found yourself unable to control your credit card spending in the past.
Whether or not you have a lot of debt, it is important that you begin paying it off as soon as possible and stick to a regular payment plan. If your debt does get out of control and problems crop up, then you should start looking at debt relief options like credit counseling or credit card loan consolidation as soon as possible. Attacking problems early will help greatly in the long run.
The basics of debt control are really not all that complex. By understanding methods for debt management and utilizing them, you can keep your debt to a controllable and livable amount.