Bad debts have a way of piling up in the most unexpected ways. Before it gets to the point of no return, you have to figure out your financial Achilles heel. For most people, it comes down to multiple personal decisions. Fix them quickly, and you’ll see an immediate change in your fortune.
How many subscription services do you have? There is nothing wrong with this particular service – if you use it. Getting a subscription means adding convenience with the additional benefit of saving money. Without those two features as a minimum, a subscription service becomes a money pit. Balance out your budget by getting rid of bloated subscription services that aren’t worth their price tags. Canceling one service is still a substantial annual boost.
Credit cards with high APR are not good things to have, debt or no debt. Even credit cards for individuals with bad credit offer competitive APR percentages. If you’re still using credit cards with an outdated APR, then drop them in favor of better alternatives. The company may even allow you to upgrade to a card with a better APR. This is a good move, and prevents you from flooding your credit score with replacement card inquiries.
Paying bills late gives you a little bit of breathing room when money is tight. This minor convenience comes with a small late fee. That small amount adds up when you combine it with other late fees. That final number gets larger when you calculate it at the end of the year. Instead of thinking of late fees as a convenience, think of them as burning piles of money. Schedule your finances around bill payments, and you’ll see how unnecessary late payments are.
Cheap fast food is helpful when you’re short on time. It’s a small price to pay, and can really help on specific days of the week. But it is not meant to be a complete replacer for cooking at home. When you start planning your meals at home, creativity goes a long way. Pay a premium up front for ingredients, and you can cook/prep meals for an entire week. The upfront cost seems like a lot, but the end result turns into a cheaper alternative than fast food.
The most important thing you can do to manage bad debt is to budget. It’s a simple solution that is overlooked due to the planning involved. While it is true that you can’t make a meaningful budget in one day, it’s also true that budgeting gets easier with time. Being mature with your finances allows you to chip away at bad debt. Developing positive spending habits as a routine prevents bad debt from creeping back into your life. Budgeting is a lifelong mission that relies on a willingness to buy into the system that you create. The only individual that can break it is the one that creates it.
Getting your bad debt under control is life changing. Once it’s accomplished, financial tasks become less stressful. With a little bit of work, your money will gain a new kind of worth.