3 Ways That People Sabotage Their Own Efforts To Get Out Of Debt
Getting out of debt is much harder than it sounds. Even if you made a budget at the beginning of 2022 and did not exceed your spending on any of the budget categories for the whole year, you are probably still in debt. In the best-case scenario, your disciplined spending enabled you to increase your savings account balance and pay more than the minimum payment on your car loan, mortgage, and credit card debt. In the worst-case scenario, unexpected expenses such as medical bills or home repairs threw your budget for a loop, and you are back to paying just the minimum monthly payment on your recurring debts. It is not just your imagination that everything is expensive and money-saving job perks are vanishingly rare, but some choices that you make can affect the success of your debt repayment strategy. To find the best solution to your debt problems, contact a Boca Raton debt lawyer.
Spending Too Much Money on Impulse Purchases, Subscriptions, Houses, and Cars
Creating a budget and sticking to it is an important first step in getting out of debt. Just keeping track of your spending, before you even make a plan for reducing your expenses, can be a wake-up call. Eliminating impulse purchases, such as spontaneously deciding to pick up food from Miami Grill or Pollo Tropical on the way home from work instead of eating leftovers at home, will only solve part of the problem. Subscription payments are a big drain on your budget. You can free up a lot of money in your budget for debt repayment by canceling subscriptions you don’t use or switching to a less expensive plan. If you are fortunate enough to be able to finance a car or qualify for a home mortgage, keep it simple; choose a house or car that will improve your financial situation, not one that will make you look like a superstar on social media.
Using Savings to Pay Off Debts
If you can use X amount of money to put in savings or to pay down debts, what should you do? Debts accumulate interest, but so do savings accounts. If you choose to take money out of your savings account to pay off your debt, be sure to treat that amount as a new debt that you must now pay to your savings account, especially if you were saving for retirement. If it means signing a promissory note with yourself, so be it.
Not Setting Goals
The worst thing you can do for your finances is not to make any plans. If your budget leaves you still falling short of your financial goals, it at least helps you identify the underlying problems that are stopping you from paying off your debts. A debt lawyer can help you figure out where to go from here.
Work With a Debt Lawyer to Think Beyond Monthly Budgets
A South Florida debt lawyer can help you identify the best strategies for paying down your debts. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.