The American Dream is expensive. To afford the fancy home, car, clothes, and even food, many many Americans turn to credit. With no limit on easy credit and financing options, it is easy to accrue debt in America. But, while consumer debt means economic growth for the country, it can be devastating to the families who fall into a financial crisis when personal debt becomes unmanageable. Credit cards make it easy to rack up large debt through small purchases. With more than 189 million credit card-holding Americans and an average household credit card debt exceeding $8,000, consumer debt continues to plague the individuals. This time last year, consumer debt in America was nearly $14-trillion after steadily increasing every quarter for the last five years.
Once you are in debt, it can be difficult to get out. Commonly known as the debt trap, Americans slip further into debt through a cycle of borrowing more money to make the payments they cannot afford for previous loans. It is robbing Peter to pay Paul. Credit is a slippery slope into a long road full of debt. So, how do you avoid the financial crisis in your life? Engaging a reputable debt relief company like cwdebtrelief.com to eliminate your debts is a great step, but there are micro-decisions you can make in the here and now to work toward debt freedom. Here are a few simple lifestyle tweaks you can make today that will propel you toward a debt-free tomorrow.
Live within your means. This means more than just finding a home you can afford. There is a lot more to owning a house than a monthly mortgage payment. The costs of homeownership include maintenance and repair costs, property taxes, and personal property insurance to name a few. The larger the home, the higher your bills will be. This is especially true for utility bills and lawn care. Even if you are renting a home or an apartment, there are still utility costs proportionate to the square-footage and the expense associated with furnishing your residence.
Make sure your housing is reasonable. If you have unused rooms in your home, consider supplementing your income and sharing some of the living expenses by renting it out to a college student or vacationers. If you are renting and you will not incur additional expenses for breaking your lease, consider downsizing. Whether you own or rent, you are paying for every square inch in your home. Make sure you are using your space and if not, find a way to reduce your space to what you need or capitalize on it so you are not throwing away money.
How many vehicles do you own – and how many do you actually need? Consider eliminating extra vehicles or downsizing the vehicles you have to save money. For every vehicle you own, there are gas, maintenance, and insurance expenses. If you can make do with selling a vehicle, do it. Riding public transit, walking, and bicycles are great alternatives to owning a vehicle and these options cost way less in the long run. If getting rid of a vehicle is not an option, downsize what you have. Look for a car you can purchase outright to save yourself from a monthly car payment. Also, opt for a vehicle with good fuel economy and a good warranty. This will save you money on gas and help keep costs down when it comes time for maintenance and repairs.
Never go shopping without a plan. Impulse buys can turn a quick stop to the grocery store into a big expense. Whether you are shopping for food for the week or clothes for school, take the time to write a list of what you need. Plan your meals so you know exactly what ingredients you need to purchase. Think about what stores you need to go to and write down exactly what you need to buy at each. The most important part of intentional shopping is to stick to the list. If an item is not on the list, do not buy it. Even if you think you forgot to put it on the list, avoid any purchases you did not plan for. Wait until the next day. If you still think you need that impulse buy, return to the store and purchase that one item only. Chances are waiting will remove the impulse and you may realize you do not need the item after all, saving you money.
One of the easiest ways you can be debt-free is to avoid new debt. Use cash to pay for everything. Unlike credit cards or even debit cards, paying with cash triggers an emotional response. Not only do cash transactions force a person to visibly see money exchanging hands, but it can also make a person have more attachment and place more value on the item purchased. Paying with cash prevents overspending. You cannot spend more money than you have. Many people incur debt by adopting a buy now, pay later mentality. Committing to cash payments prevents future debt by keeping spending habits in check. At the same time, constantly budget for extra cash to ensure that you always have some money leftover.
Avoid paying full cost for anything. Whether you wait until the item goes on sale, find a coupon to save a few cents, or can save money by purchasing in bulk, do what you can to get the best deal. This applies to all your purchases. Groceries, gas, and clothes are essential items where you can really rack up savings. See what kind of reward programs are available where you buy your groceries. Check out the loyalty program at your local gas station. Sign up for your favorite department store’s mailing list to maximize the number of discounts you receive.
Keep in mind that just because something is on sale does not make it a great deal. Stick to the plan of only purchasing the things you need and avoiding the impulse buys. It is worth shopping around when you know you need a new pair of jeans or you want to buy steaks for dinner to find out which store is offering the best price on the items you need.
Paving A Path to Financial Freedom
If you’re struggling to manage overwhelming consumer debt, know that it’s never too late to start cultivating healthier financial habits. Luckily, there are several ways to instill meaningful debt management plans. Reach out for help, establish a plan, and take small steps to get to where you want to be.