Many people are inundated with debt through their mortgage, lines of credit, or personal and credit card debts. Most people also live paycheck to paycheck, with minimal savings or investments, and have no idea how to get off the tread mill. It’s no wonder most people feel “there is no money left at the end of the month.”
With the Christmas holidays coming up, it’s even more important not to be lured into piling on more debt.
Where Does All the Money Go?
Mortgage payment and housing costs such as rent and utilities are fixed expenses. These can easily account for half of a family’s net income or more. There is no getting around that one, and most urban centers, rent and housing costs are not cheap. Add on food and other costs for your family, and that’s another big chunk off of anyone’s income. If you live far away from work you will need a car to commute or face 3 to 5 hours of commuting per day, and that’s also a huge chunk of income down the drain. Start adding all these expenses up and there isn’t much room left for anything else. It’s no wonder many live beyond their means and use debt to make the difference.
Don’t Be Lured Into Christmas Debt
With Christmas shopping and holiday advertising in full swing, many feel obligated to buy gifts, entertain, or even take a holiday they can ill afford. Christmas is also another big drain on people’s resources, and many again use debt to make the difference. Come January that leads to a credit hangover and credit card bills for many.
The Problem with Paying Down Debt
Most people do make an honest effort to eliminate their consumer debts at some point, making a committed budget to pay $200 or $300 per month or more on their credit cards. Many even get consolidation loans with the best of intentions. The main problem is people continue to use their credit cards so the balance never gets paid off. The high interest rates keep compounding, and people continue to get behind. Many people also don’t have a secured line of credit, to reduce their interest payments.
Goals for Paying Down Debt
Your first goal should be to eliminate all of your credit card and consumer debt. That means:
- Don’t buy Christmas gifts you can’t afford.
- Stop using credit cards to make up for shortfalls.
- Stop spending i.e. eating out and buying things you don’t need.
- Putting your credit cards away in a safe deposit box, so you don’t keep using them.
- Making a commitment to pay off all your credit card debt, and in addition
- Paying off your other consumer and personal lines of credit.
Paying down you consumer debts should be your first priority. It may even take you two to three years to get ahead, but it will be well worth it. You will have paid down your debts and have a big weight taken off your shoulders. The hard work invested to pay down your debts will give you a sense of accomplishment and make you more cautious towards using debt in the future.
Once you have your consumer debt paid down, investing for your future will make a lot more sense. So this Christmas Season, don’t be lured into piling on more debt!
