Determine How You Got Into Debt
Debt happens to everyone at some point, and it isnt necessarily bad. A mortgage or student loan is generally considered good debt because its a real asset or an investment in your future.
Bad debts from
credit cards, medical bills, and personal loans are the kinds you should worry about. The four main causes of bad debt are:
Family death or major medical emergency/illness
Divorce
Job loss
Overspending
If you had no debt prior to a major financial downturn, then you can get debt relief help through debt consolidation, debt settlement, credit counseling, or bankruptcy.
If your debt is a result of overspending, you will need to make changes to your spending habits.
Find Your Spending Triggers
Asking yourself why you spend more than you make is the first step to debt relief. Do you buy necessities like food, shelter, and reasonable transportation, or do you buy things you want at the moment like a new CD or an expensive dinner?
If you make enough to live on, but overspend on things you want, you can only find permanent debt relief by uncovering your spending triggers. Common reasons for overspending are:
Maintaining an image or lifestyle
Instant gratification
Feeling of power or self-worth
Avoiding feeling poor or deprived
Stress relief (Retail Therapy)
Credit doesnt feel like cash
To pinpoint your spending triggers, keep a spending journal for one month. Record everything you spend, what you bought, how you felt at the time, and why you wanted it. At the end of the month, review your list. You will be able to see your triggers in the list.
For example: $1.00, lottery ticket, felt excited and hopeful, winning would change my life. The trigger is spending to improve self-worth or to avoid feeling poor.
$43.54, new red heels, felt like my boss is pushing too hard, wanted to treat myself. The trigger is stress relief or wanting to feel powerful.
Change Your Money Views
Changing your money views is the third debt relief step. Money itself is neither good nor bad. The trouble comes from how you feel about money. Spending makes you feel good about yourself, satisfies a desire, or relieves your stress at the moment, but then you feel worse when the bill comes or you cant pay your other bills.
Emotional Spending
If youre an emotional over spender or spend because you have the money or its coming soon, its time to cut yourself off. Spend as little money as possible for one month. Dont shop, go out to dinner, or go places where you can spend money. Bring your lunch to work with you to save money.
When you must spend money for things like groceries or gas, take only the amount of cash youll need. The rest of the time, carry only $20 in case of a true emergency.
At the end of the month, look at how much more money you have than you usually would. How good does that feel? If you saved enough to pay down some debt, how much better does that make you feel?
Credit Spending
If you overspend because credit doesnt feel like cash, spend only cash for one month. Remove the checks and credit cards from your wallet. Once you see how much money youre actually handing over, youll spend less.
Make the Change Permanent
Permanent change is the final debt relief step. At the end of the month, keep going. Allow yourself to buy the things you need, but ask yourself if youre buying it to feel better or if its a necessity. Think about a purchase for a day or two, and then buy it if you really need it.
Once you change your money views, you can find additional debt relief help from a credit counseling service, consolidate credit cards, or create your own credit card debt relief system to help you get out of debt and stay there.
Source: http://www.bills.com/debt-relief-help/
