Are you trying to get out of debt?
This can be a real struggle as you are probably well aware!
In order to make the process a little less suffocating, it is wise to identify your weaknesses and areas of difficulty so you can directly change those aspects.
This article will outlay some of the common reasons why it is so difficult to get out of debt and what you can do to change those areas.
Changing your Lifestyle
In order to get out and stay out of debt, a change to your financial lifestyle is more than likely necessary.
Changing your lifestyle can be really difficult and old habits are ever easy to fall right back into, especially for those with unhealthy spending habits!
However, it is important you make adjustments to your spending habits and mindset regarding money to get yourself out of those pesky debts.
This can be very difficult for a variety of reasons. For starters, you will generally adjust to the lifestyle you’re currently living and develop some often-unhealthy habits and mindsets regarding your personal finances.
These can be very difficult to break, especially for those who adjusted to the “paycheck to paycheck” way of living and spending.
You may also have to skip out on occasions or outings that you would rather attend or cut back on the meals you buy out each month.
A common culprit for many people’s poor spending habits is the daily coffee at your favourite café, which you may have to steer clear of if you wish to get out of those debts.
Budgeting and Sacrifice
Following on from the previous point, sacrifice and budgeting may be habits required to pick up to really pay off those debts!
Budgeting is the process of sorting your spending into categories, generally over a month, and assigning said categories a spending limit for the month.
Categories you may consider in your budget include utility bills, rent, or mortgage payments, groceries, petrol, transport, eating out, emergency savings, and a fun category of funds used as you please.
Another integral section of a budget, especially when trying to pay off debts, is general savings which you may want to invest quite a reasonable portion of your income into in order to get out of debt.
So, why is this so difficult?
Although budgeting may sound simple, it is generally the element of sacrifice and self-discipline that is the downfall of new budgeters.
It will mean that if your spending category doesn’t allow a night out with your friends or a quick stop at McDonald’s then you will have to miss out on that treat to use your budget effectively.
Unexpected Expenses
Life’s full of surprises. You’ll think you have everything sorted out and then BAM, some emergency comes up that you need to drop everything for and attend to immediately.
This can be a real annoyance and cause you to miss out on days at work or have the need to spend well over budget.
For this reason, it can be extremely difficult to get out of debt.
To avoid this issue, it is recommended that you establish an emergency fund as part of your savings.
An emergency fund is a sum of money saved that you do not access unless it is absolutely necessary or in the case of an emergency.
An emergency fund is a great way to avoid the need to borrow money or miss debt repayments in a financial emergency, such as sickness or unemployment.
It is important that when you spend the money in your emergency fund that you continue to add to it for the next emergency.
It Takes Time
Getting out of debt is a time-consuming matter that you may have to invest many years of saving and budgeting into getting out of.
As you likely very well know, you’re not just going to wake up one day and suddenly have all of your debts paid off.
Paying off debts can take multiple months and years depending on the amount of debt you have and how much money you are able to viably put aside to pay them off each month.
Constantly putting aside money and missing out on fun opportunities can be really draining, and if you are financially not able to pay off too much of your debts each month it is easy to lose motivation to keep up with your healthy financial habits.
In this way, it is really important that you demonstrate some balance within your saving plans and budgeting to keep yourself motivated.
Don’t turn down all of your friends or family’s invites for fun activities for the purpose of saving; you are so much more likely to lose motivation if you do so!
The Cycle of Debt
Another reason you may be finding it difficult to get out of debt is due to the infamous cycle of debt.
The cycle of debt is generally the fault of the loaner as they, once someone borrows from their business, want to keep them missing debt payments, keeping them paying interest funds and making their company more money.
Once you miss a debt payment for the first time, interest rates and missed payment fees become very large very fast, deeming you unable to make the next payment, starting the process over again.
For this reason, many debtors find themselves trapped in the cycle of debt simply unable to find a way out!
This is why it is vital that before you even consider signing off on a loan, you have a comprehensive debt management plan in place as well as, of course, an effective budget for your personal lifestyle and income.
Your Loved-Ones Aren’t Up to Date
Paying off debt can take up a large portion of your time and, more urgently, your money.
If you share a house with a spouse or someone whose finances are affected by you and vice-versa, you should make sure you take the time to have a conversation about debt repayment with them.
To get the debts paid off, you have to share a household budget and make sure everyone is sticking to it, otherwise, it simply will not work.
Key Takeaways
Getting out of debt can be a struggle. There are various factors within your life that may add to the difficulty of paying them off.
However, being able to identify why it is so difficult can really assist you in changing some of those factors to get out of debt once and for all!
It is vital that you remember, however, that everyone’s financial situation is different, and one rule or strategy will generally not apply to all.
Tailor your debt management plan to your personal needs; you’ll be surprised how much it helps!