Fight away the debt blues
By Priscilla Solomon, submitted February 2010

Steering clear of unwanted debt is a great way to live a happy life. There is no quick way out of this financial mayhem. It can be cured only through proper and timely treatment. Your awareness and prompt action can help you write off your debt-problem. Stop asking yourself "Will I ever get through this? “. Instead ask "When will I be through this?”.  This is because debt is not an unsolvable problem. The first step towards a debt-free life is frugal living. You should start taking a few measures once you are in debt.

Work out a monthly budget: Budgeting is the most essential step to bring your finances under control. You can draft out a monthly income statement in order to know exactly how much is your income versus expenditure. You will need to jot down all your daily expenses and sum them up at the end of the month. A personal income statement will help you determine the area of concern and subsequently you can cut down your expenses in those specific fields. Make a rough calculation of how much you owe and to whom. Make your budget accordingly so that you can pay off a certain amount to your debtors every month and thus come out of debts faster.

Avoid minimal payments: Debtors are often deluded by the idea of paying the minimal amount against their credit card debt. In reality making minimal payments each month increases the amount of time it will take to pay off your debt. It also increases the amount of interest you end up paying. To pay off your debts faster and cheaper, try to pay the maximum amount you can afford each month.

Get into the habit of paying cash: Make cash payment for every purchase that you make. Try and keep away your credit cards for a while. If you do not have the cash to buy something, it really means that you cannot afford it at present. So save up some money and buy it when you have enough cash. In this way you will have to spend less than you earn. By maintaining a positive balance, you can improve your finances to a considerable extent.

Find out other sources of income: If you earn a little more than what you normally do, you can use that money for paying off your debt bills. You can start blogging or initiate some online business in your free time in order to earn the extra bucks. Try out simple ways to make some money. For example, you can rent out your garage or driveway during the day as you would be away for your work. You can sell your old broken mobile which has been lying unused on your shelf, to one of the many mobile recycling websites. You can think of earning some money by referring your friend to a job website, as many of them pay you for referrals. Exercise your mind and you will be surprised to find out that there are so many ways to make extra money each month.

Make a resolution not to borrow any more money:  Avoid getting into more debt. Do not take any loan or borrow any money once you are in debt. If you have decided to consolidate your debts, make sure that the interest rate and duration of the consolidation loan is suitable for you. Always take legal advice before you enter into a debt management or debt settlement program.

Learn to live a frugally happy life: Frugal living can be fun. Believe in this maxim and start your day. Carry your lunch instead of eating out everyday. This will help you save up a lot of money. Plan a simple weekend activity instead of a movie or an expensive dinner. You can go for a picnic with your family or friends with some home made meal and freshly brewed wine. You can cuddle up with your beloved on a couch and watch a movie of your choice at home. Go for a walk on the beach or a garden and get your mind refreshed. You will be surprised to find out that fun can be a lot pocket-friendly.

Save more spend less: The ideal way to fight your debt is to save more than you spend. However, this is quite a difficult task to fulfil in real life. Still, you can bring some changes to your daily life and save up some money. For example, look for alternative energy or telecoms providers with a lower cost. You can also change bank accounts if you have to in order to avail lower interest rate. Yet another option can be to get a cheaper mortgage by re-mortgaging to avail lower monthly payment. In this way you can get rid off unnecessary monthly expenditures and thus save a lot of your hard earned money.

Getting out of debt is only possible if you really want to get out of debt. With a little conscious effort you can drive away the debt blues from your life.

Priscilla Solomon is a finance blogger and debt adviser. She asks you a simple question: Should you consolidate debt with bad credit history?