Debt Control-How It Works

By: Susan Hutson

Living on borrowed time and credit is one of the quickest roads leading to bankruptcy. Prior to the market crashes and financial crisis that hit on a global scale, loans and credit cards were easily available. This lead to an over dependency on credit purchasing. Today, increased personal debt resulting from excessive use of credit cards and uncontrolled spending habits are the leading reasons behind why most individuals and families are finding themselves in a financial mess. A mess which if left unchecked will eventually spiral out of control. What is equally alarming is the fact that financial mess and mismanagement is slowly becoming the leading cause behind couples and families breaking up.

While the future may seem bleak, all is not lost. With a little prudence and control, debts and financial problems can be controlled and resolved. Agreeably debt control and management is hard work and requires above all immense patience and self restrain at every stage, it is not an impossibility. Here are some facts about debts and ways in which you can learn to take control of your finances and life as well:

Credit card debts are the leading cause behind financial problems - Plastic cash is easy and empowering, right? Well, unless you have the proverbial "hen that lays the golden eggs," you might want to differ. People the world over are reeling and cracking under the pressure that unwarranted and uncontrolled spending through credit cards brings. And if you think paying the minimum due every month is going to get you out, well calculate what you pay in interest and principal and see if you can justify shelling out thousands of dollars in excess to your borrowed or due amount.

If you already are in the trap or still like to have the option of having plastic money then here is what you can do to save yourself from going over:

· Try and avoid charging meals, travels and vacations unless you know for sure you can replace it in a month or two. A better way is to simply plan ahead and put some money aside for such expenditures.

· Avoid falling into the "minimum payment due" option trap on your card. Like I pointed out earlier, if you do that you will end up paying an inflated amount on your total due. Yanking the band aid in one go is painful, however it is quick.

· Resist the urge to swipe for every purchase you make. When you have to pay in actual hard cash, it makes it a lot simpler to talk yourself out of excessive or unnecessary expenditures. In fact you will be surprised at just how quickly you can come up with reasons "why not to buy." Something about handing over your hard earned money over the counter I think. Well, if it can help rope in spending habits why not?

· Once you are done with the payment of a card, cut it into two and cancel it. Condition yourself to live for a while without a credit card. It is not impossible. Our parents and their parents did it and they lived longer!

· Paying or clearing all your credit card dues can be exhilarating and you might be tempted to apply for a higher limit or a new card. If you can do it once, you can do it again right? See, now that is exactly the kind of thinking that got you into this mess in the first time place.

Loans, student loans, mortgages - While applying for these loans don't go with the first option that comes your way. Wait, shop around and go with the best deal. Even then, borrow an amount that you know for sure you can pay off. Once you have a loan to clear, work towards clearing it as soon as possible. The best way to go about would be to borrow one loan at a time so paying for it is easy. Borrowing against your 401 (k) or a home mortgage is best avoidable unless absolutely necessary.

Expenses Vs earnings - A good way to keep tabs on your expenses is by keeping detailed accounts of what, how and where your money goes every month. In one column write out your earning and the other your expenses. Your aim should be to have a positive balance even after you have accounted for all your bills and expenses. Keep that money aside and let it build up. Remember controlling your expenses is the first step towards a debt free life. Besides saving that little money every month will eventually yield a buffer or cushion fund.