Why is debt so difficult to get out of? Whether it’s outstanding utility debt, credit card repayments or payday loans, debt is something that can haunt us for years. Plaguing our credit scores, leaving us with little money to play with and even impacting our mental health – debt can make planning your future incredibly difficult, whether you want to put money away in your child’s savings account – click the link if you’re looking for a junior investment ISA for your little one – you want to go on holiday or save for your retirement.
So, why do so many of us struggle with paying back our debts and getting back on track? Here we’ll explore some of the genuine reasons why you might be struggling to get out of your debts.
You can’t say no
Drinks tonight with friends? The kids wanting the latest console? New shoes? When you struggle to say no to friends and family, it’s difficult to keep control of your money and your debts only spiral further. It’s only natural to want to spend time with friends, and give your children what they want, but you need to be realistic. If giving your children what they want puts the whole family in financial jeopardy, then it’s simply not worth it. And your friends will understand your decision to prefer a quiet night in instead.
Bonus tip: Parents should also be wary of passing bad money/spending habits onto their children. Saying no from time to time will benefit everyone.
You don’t know how to manage money
Most adults are thrust into a financial world full of loans, credit cards and other financial products that they know very little about. Sadly, most of us find out about repayments, creditors and interest rates the hard way.
When you don’t know how to manage your money, you’re more likely to remain in debt, so research how to budget correctly. If there are gaps in your financial knowledge, get to grips with what you don’t understand, quickly. Figure out how much you earn, and how much you’re spending. The better you are at managing your money, the more of it you’ll get to keep each month.
You don’t have an emergency fund
Most of us are walking a financial tightrope these days. So, when a financial emergency like car repairs or a broken appliance hits, many of us have no other choice than to borrow money at high-interest rates.
When you build up an emergency fund, you take the pressure off your basic income. So, if something unexpected does happen, you can source the funds from your emergency account instead.
You’re still using your credit card
When you continue to make purchases with your credit card, you’re going to struggle to make any progress with your finances. Credit cards mean frivolous spending and impulse buys. And the more you have to pay off each month, the further your salary will have to stretch. It’s always a good idea to have a credit card for an emergency (as long as you can pay it off) but consider getting rid of your credit cards and paying with your own money instead!
And finally, it takes too long
Sometimes getting out of debt can take years of careful financial planning and budgeting. And it’s easy to go off track when you get bored or lose interest in debt repayment. Try to keep on top of your repayments by checking in with your progress every month. When you know how long you have left to go, you’ll be more inclined to keep going until you’re totally debt-free.
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