Are You In Debt?

A man in debt is so far a slave. ~ Ralph Waldo Emerson

Most people are worried about their debt because the economic outlook is bleak. Is it the economy to be blamed or yourself?  Let’s examine the reasons why you are in debt and the best way to deal with it:

1.       No budget: There is no advance planning or a budget to manage your personal finance. You just spend as you wish and when you need more money, you just borrow to meet your unplanned spending.   When you spend more than what you have, you are in debt. When you are in debt, you are also incurring interest on the amount you owe. The longer you drag your debt and delay payment, the more interest you will have to pay. You need a monthly budget and allocate your take-home pay to meet various expenses. The purpose of a budget is to spend not more than what you have earned and avoided getting into debt.    

 

2.       Not tracking your spending: With a budget, you still need to monitor and discipline your spending accordingly.  When you are not in control, you are going to overspend and get into debt again. Follow your household budget faithfully.

3.       Instant gratification: Impulsive buying is one of the reasons why you get into debt. It is out of your budget because it is not what you need. When you really need to buy a big-ticket item, you have to save for it. 

4.       Your Credit cards are the culprit: It is the easiest way to spend money that you have not earned to buy something that is non-essential. When you spend on credit you are effectively in debt. When you don’t pay credit card bills fully and timely you are going to incur huge interest charges. Get rid of all your credit cards if you can’t control your urge to spend. Unmanageable credit card debt is the main reason why people become bankrupt.

Never spend your money before you have earned it. ~Thomas Jefferson

5.       You want to follow the lifestyle of the rich and famous: Your financial resources are limited. You can’t follow the way how others live their lives. They are many others who can afford more material things in life, but you have to live within your means.   

Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like. ~ Will Smith

6.       Your worst habit: Gambling is the worst habit. No amount of money can satisfy your craving. Gambling is the easiest way to get into debt beyond your control, ruin your career, destroy your family and end up in bankruptcy. The only solution is to kick the habit now.   

7.      No plan for the future: When you can save, you can plan ahead, invest and grow your wealth. You need money to have an emergency fund, down payment for your car and dream house, children’s education, and your retirement. There is no financial future when you are in debt.   

What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?  ~Adam Smith

Rather go to bed without dinner than to rise in debt. ~ Benjamin Franklin



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