Numerous Tennessee residents are struggling financially. Are you one of them? If you are, it is okay. There may be a way to improve your situation. It all starts with not making some common debt mistakes.
A recently released article discussed five debt mistakes that people make that only hurt their debt repayment efforts. What are they and why should these mistakes be avoided?
Mistake number one: Failing to budget
Just about everyone has heard the phrase “if you fail to plan, you plan to fail.” For many individuals, setting a budget and sticking to it is enough to improve one’s financial situation.
If you are not sure how to set a budget, start simply by tracking your monthly expenses. When you see where every penny is going, you can see what is necessary spending and what is unnecessary. You can then work on reducing the amount you put toward wants and putting that money toward paying down your debt.
Mistake number two: Credit cards
There is nothing wrong with having credit cards. There is something wrong with having too many or failing to pay balances in full. Credit cards commonly have insanely high interests rates. Those who carry balances and only pay the bare minimum end up paying a lot more for their purchases in the long run. If you end up with a credit card balance, it may be beneficial for you to work toward paying the debt off before you use the card again, if possible.
Mistake number three: Ignoring why you went into debt in the first place
Are you a compulsive shopper? Did you experience a reduction in income but failed to change your spending habits? Did you experience some unexpected expenses? There is a reason people fall into debt. Once you figure out what your reason is, you can make a plan to attack the debt and avoid going into further debt.
Mistake number four: Closing accounts
You would think that a good way to avoid going into debt would be to close some of your accounts. The truth is that doing so can hurt your credit, which can then hurt your ability to obtain loans and other lines of credit when you need them. After paying accounts off, keep them open, but do not use them unless you really need to.
Mistake number five: Going it alone
Many people are afraid to admit to others that they are having financial struggles. While it is not something that you need to share with everyone, it can help your situation to seek advice from others. You may turn to family or friends, or you can turn to a professional for guidance on how to address the situation. This can ease the burden and give you ideas about how to tackle your debt.
Money struggles are very real for a lot of people. If you work hard to avoid all of these debt mistakes yet still find yourself in a financial hole from which you cannot escape, there may be legal options you can utilize to address the matter. Bankruptcy, for example, is just one option that can offer debt relief and protection from creditor harassment. Other relief options may be available; it all depends on the specifics of your situation.