Debt is like a disease that can start out small and grow into something more serious.
According to a study conducted by the U.S based debt collection company, Urban Institute debt is so prevalent that 1 in 3 adults in the U.S has to turn to short term loans in order to cover their monthly expenses. It gets harder to recover from debt once you find yourself having to get more in debt in order to service older debt. There are ways to get yourself out of debt and back to good financial health that do not include digging yourself an even bigger hole.
#1. Create and stick to a budget
The first and more prudent thing for anyone to do is to create a budget they can stick to. You can use this simple formula to do so:
Take your monthly household income and subtract your monthly expenses. A positive amount means you’ll have money to put away in savings whilst a negative answer means you need to either scale back on your expenses or find an alternative source of income. This is a basic formula that anyone can follow. However, since we live in an imperfect and unpredictable world sometime, even people who are strict about their budgets find themselves needing some sort of financial help and this is where pawnshops come in handy. You can scale back and declutter your life by taking unused items to a pawn shop to get cash for it.
#2. Scale back on charging everything to your credit card
Credit cards can be useful but for the most part, they are serious debt traps that should be avoided if possible. Pay cash whenever you can instead of charging things to your credit card. These have higher interest rates than pawn shops. Instead of charging more to credit cards, work at paying off whatever you owe on them before it snowballs into something bigger.
#3. If you have loans, you might find that paying off debt that has the lowest balance will be helpful in tackling your high interest debt.
Take some time to draft a list of who your creditors and what you owe in the order of lowest to highest. When you have done that determine the minimum payments that you need to make for every debt. Pay that debt sooner by adding a little extra on your monthly payments until your monthly fees are paid off. You might be surprised by how gratifying it is to successfully whittle away at the debt you already have. You can raise more money towards servicing debt by taking your unused and damaged gold jewellery to a pawn shop for cash.
#4. Start paying off high interest rate debt
If you are devising ways to reduce your debt the best things to do is to start with those that have high interest rates. Putting off high interest rate debt means that the debt keeps compounding every month you fail to honor it. Since credit cards are usually the biggest culprit in the unhealthy debt cycle you can also try moving and transferring your credit card balance to another bank with lower interest rates. That should give you some reprieve.
#5. Create a spending plan
A lot of us end up spending money on things we shouldn’t be buying. For instance, you shouldn’t be spending money on pizza every day. You shouldn’t been buying bags and shoes just because they look cute. Be sensible about where your money goes. Put your expenses in their order of importance. Cut out those expenses that are useless. Allocate money for expenses that are absolutely necessary.
This does not mean you don’t get to spoil yourself, you should also make room in your budget for spoiling yourself.
The benefit of creating a budget is that you get to live within your means with less stress and a better opportunity of never being caught off-guard financially.
Getting a handle or managing your finances does not have to be hard. However, life happens regardless of how prepared you may be. This is why pawnshops are there to help you deal with the unexpected.