Debt is a concern of millions of people. Many people cannot imagine their life without debt. It seems to be a necessity to them because, at one point in life, you have to rely on funding to buy certain things like your house or car. The decision to buy a house and car is taken after you turn 30, but you find yourself in the red in your 20s.
The reason is that you tend to borrow money to meet your unexpected expenses instead of saving for them. However, this is not the only reason why you keep taking out small loans in Ireland every so often and then fall into an abyss of debt. Here are some false beliefs that push people into an endless cycle of debt:
This is one of the biggest myths that prompt you to keep borrowing for your regular and emergency expenses. You often blame your salary for being unable to stash away money for emergencies. The fact is that you can manage to set aside money even if your wages are low. It is not important how much you save every month and how quickly you achieve your goal. What matters is how consistently you keep laying aside money.
Analyse your monthly expenses and cut back on them. Stop frivolous purchases and cut frequent eating out and nights out. You will have to live a modest lifestyle because your budget does not allow for splashing out. The money you save on frivolous purchases should go towards your emergency cushion. Of course, when you have savings, you can easily avoid borrowing money, or if you have to, you will borrow only to fill the gap.
People believe that there is no point in making sacrifices. They will make you stop doing things you want to. In the beginning, you can be abstemious, but after some time, the idea of sacrifices goes out the window as you see no significant improvement in your financial condition.
Sacrifices do not include stopping eating your favourite food or going on a vacation. Sacrifices are meant to avoid frivolous purchases. You should make realistic and fruitful sacrifices to keep improving your finances. You should consider the following sacrifices:
These challenges are temporary, but they will help you a lot to gain control of your finances.
A lot of people hate budgeting, not because it is boring or complicated, but because they think that budgeting will restrict them from spending money the way they want. Budgeting encourages a miser lifestyle. The fact is that budgeting gives you a reality check. it clearly tells you how much money is coming in and how much is going out.
Many people find themselves in a debt hole because they do not create a budget and keep sending money without realising that they have overspent. Credit cards are to blame for this situation. Because credit is available easily from various reputed direct lenders like MyCreditBucks, you do not care about budgeting.
Borrowing may be suggested only when your savings have fallen short of cash, and you need money for emergencies. You should always try to create a budget to get clarity about the inflow and outflow of cash. There are various free budgeting templates you can use. Budgeting apps can come in handy when you do not want to create a manual spreadsheet.
You will have to link your bank account to the app and get all transactions recorded in one place. However, it is possible only when you use your debit card to make all purchases. Manual entries are required to record card purchases.
Unexpected expenses can pop up at any time. To meet those one-off expenses, you must have a credit card. For instance, if you need money for Christmas expenses or your car is acting up, you can count on credit cards.
The fact is that they will add up your debt problems. Christmas is an annual celebration, so you have a full year to save money for it. You should not have an excuse for not being able to stash away enough money to meet all Christmas expenses.
You know that cars, washers, dryers, and other electrical appliances go out of action abruptly. Of course, your savings must be able to meet these expenses.
Having a credit card is not a bad idea, but it is not necessary to use it every time you shop for something.
Many people say they are in debt when they have outstanding instalment loans and multiple small debts and are juggling with payments. As long as they manage to keep up with payments on time, they do not worry about debt at all. For them, having small loans is very normal.
Unfortunately, you do not realise the fact that your payments account for only 30% of your credit score. Being in debt all the time indicates that you are bad at money management. You will struggle to get the nod for a mortgage, and an auto loan, and high interest rates will be charged.
Paying off debt is hard, undoubtedly, but instead of throwing in the towel, you should take the bull by the horns. It might take a bit of a long time, but one day, you will certainly get out of it. Debts are not necessary, and they should be avoided as long as you can.
