Escaping debt is on everyone’s mind. It would be great if we never needed to obtain a cash advance or payday loan; or have to use emergency credit cards for regular costs. The cost of using third party money is often never addressed when the bottom line monthly payment is the only concern. People tell themselves they can afford so much extra per month towards a bill instead of calculating the final cost of the purchase after it sits as debt over an extended period of time.
Using cash advances to keep up with debt is not healthy for any budget.
People who tend to forget the final costs of their great deals when credit cards are used often have a bit of debt piled up. Those who recognize poor spending or money management skills can try to help themselves keep from turning some debt into piles of debt.
Look for warning signs:
- You tend to spend more money than you bring home
- You only make minimum payments no matter how much the card is used
- You juggle payments between cards or use online cash advances
- One or more of your cards has been maxed out
- The mailman brings you an upset stomach, dreading the next bill delivery
- You have something in collections already
- Creditors are calling with the fear of your bill being sent to collections
- You owe more than 30% of the credit limit on all of your cards
- You take out a cash advance to pay another one off
- You have used short-term loans to make credit card payments
- The thoughts of bankruptcy swirl in your mind
- You fear that you may not b able to keep up with rent or the mortgage payment
When you have one or more of these warning signs happening within your finances, it definitely is time to get serious about improving your financial situation. Stop using credit cards, cash advances and payday loans. There is no escaping a pile of debt and think that you can come out clean.
Put a freeze on any extra spending and figure out how much you really owe in credit card and cash advance debt. Determine how much you can afford to pay towards your debt each month. A concrete plan to pay off the debt will be crucial. Most importantly is to create a working budget using only the facts.
- Total income
- Total credit card and short-term loan debt
- Cost of living expenses split up into categories
- Plan to cut back on costs
- Plan to disburse extra income towards debt
The hardest part with any kind of plan is to stick to it. You will need to do your best to stay within your limits and not lose sight of any financial goals.
We know we cannot escape debt. Even bankruptcy costs money, it may still require monthly payments (Chapter 13) and will keep your credit burdened with negativity for 7-10 years. Some people will even have to pay taxes on the forgiven debt. It is a messy solution and should be considered as a last resort option.
Stay away from payday loans, cash advances and credit cards. Escape the causes of your debt and climb your way back up towards financial freedom.
