The level of debt in America is a huge and growing problem. In fact, current statistics show that the average household has more than $15,000 in outstanding credit card debt, and more than twice that amount in student loan debt. When the mortgage payment, utility bills and expenses for food, medical care, insurance, education and transportation are added in, it becomes easy to see why so many families are struggling with money. If these statistics apply to your situation, and you find yourself nearing bankruptcy, here are some serious strategies to help you stop the madness and regain control of your financial life.
Establish Firm Financial Guidelines
Managing finances without a well-planned written budget is like trying to drive a car to an unfamiliar location with no GPS system or clear-cut directions. While you may still get to your destination, chances are you will have spent much more time and money to accomplish the feat than you would have if clear guidelines had been given. In the same manner, handling your money without a clear plan for spending, saving and debt repayment often leads to unnecessary purchases and living paycheck to paycheck.
Budgets come in many different forms, but one of the best ones for people who are dealing with financial issues is called a zero-based budget. A zero-based budget is done by documenting every dollar of income that the household will have each month, and giving each of those dollars a written purpose. Since each dollar that comes in or goes out is accounted for, it becomes easy to see where problem spending is occurring. Here is more information about budgeting and details on setting up a zero-based one.
Take the Convenience Out Of Spending
If a peek inside your wallet reveals one or more plastic credit or debit cards and little or no cash, you can rest assured that you are normal. However, as we learned earlier, being normal often means being in debt, a lot of debt. If you are serious about breaking out of the financial ruts that you have fallen into, you must be ready to make serious changes in your daily life. One of the best ways to do this is to remove the convenience factor and become more in touch with the money you spend each day.
Even though our credit cards have limits and our debit cards draw directly from bank accounts, we rarely think about those limits during our daily spending. Counter this by removing plastic payment options from your wallet and replacing them with the exact amount of cash your budget says you can afford to spend. This is a great way to become more in touch with your money and avoid hundreds of dollars in impulse spending over the course of the month.
Stop Hidden Costs and Recurring Fees
Signing up for free trial offers that revert to monthly charges at the end of the trial period, late fees from videos rented from the machine outside the grocery store and downloading music and games to mobile devices are some good examples of stealth spending that adds up quickly, yet is often overlooked.
Examine recent bank statements and credit card bills for these recurring charges and then cancel them. Keep them under control by establishing a change jar where the household's loose change can be collected and used to purchase a cheap, reloadable debit card that will be used only for this type of expense. Removing these stealthy expenditures from the budget helps to keep them more manageable, as well.
Seek Professional Advice
If you have tried every possible way to regain control of your financial life, but find yourself falling further behind or failing to make progress, consulting with a knowledgeable professional like http://wfactorlaw.com is the next step. A reputable bankruptcy attorney can explain all the options that apply to your individual financial situation and help you make the decision that is right for you.