Are You in a Debt Spiral?
A debt spiral is pretty much like a bad nightmare where you’re falling into nothingness and can’t get yourself out of it. Many people go through debt spirals in their lifetime because of unforeseen expenses, loss of a job or medical crisis.
Sometimes it’s by no fault of your own that the debt spiral occurs, and other times it’s because spending habits were out of control. Whatever the reason you find yourself in a debt spiral, it’s time to spend less, make more money – or both.
It may take a while to unravel the tangled mess you find yourself in, but you’re sure to learn more about how to better manage your money and a little bit about yourself, too. The first thing to do if you find yourself deep in debt is to assess your damage.
How much do you owe, to whom do you owe it and what interest rates are you paying? You should assess everything in your litany of debts, but especially focus on consumer debts such as credit cards.
Find the root cause of your financial problems. That can only be done by tracking your spending. You’ll then begin to understand the weak spots of your spending habits and be able to focus on areas where you can cut back.
Most debit and credit card expenditures are easy to track – or you can do it the old way, by saving and adding up receipts. After you know where your money is going you can include the entire family in your plan to cut back.
Don’t cut out everything that the family enjoys, but do include them in the effort to trim some of the fat from your spending habits. If you need more help than a budget plan to cut back on expenses, consider a consolidation loan to reduce your multiple payments to one and to stop the high interest rate you may be experiencing on credit cards.
Being unable to make payments to creditors on time can ruin your credit standing and even lead to harsher measures such as bankruptcy. One signal that you’re in a debt spiral is that you can’t afford to pay your credit cards in full each month.
You keep using your credit cards to purchase necessities such as food and medicine and the creditors add an exorbitant amount of interest to the balance each month. You may even borrow to pay bills – a sure sign you need to sit down and carefully assess your spending and what got you in this predicament in the first place.
Don’t assume that the road will be smooth after you get yourself out of the debt spiral. You have to get to the root of the problem and take steps to keep you from ever having this problem again.