Search for one on the Internet, and you will get a humongous list of rich and famous persons who lost their fortune in debt being unsuccessful in managing it judiciously. Some of them are millionaires, famous entrepreneurs and even celebrities that failed to manage their debt. Yes, a debt or a couple of it is very common amongst the rich and famous, much opposed to the common belief that people with medium income fall in the debt trap.
Having debts that are manageable is prudent and nothing wrong in it as there are a lot of reasons and tax benefit being the primary one. However, being strategic, diligent and honest with it and its management is paramount to make sure it does not go out of control leading you to the dark, deep black hole of debt. Once you allow it, you will find it very difficult to come out of this vicious circle, without damaging your credit, probably the last thing in your mind.
Therefore, proper planning and a meticulous approach are what you require to be in debt but out of the debt hole.
Manage your money
Even if you receive a seven-figure paycheck every month, it will be unwise to think that you can buy a lifetime of financial security. Things are not exactly as rosy as it is presented and seems. In spite of making millions, even the wealthy celebrities and stinking rich entrepreneurs end up broke. It is all due to lack of planning that they cannot keep their heads well above the financial waters. The good money management app could help you manage the money effectively, check the truebill reviews in this regards.
Not taking names, there are several celebrities that are now in unmanageable debt due to their lavish lifestyles and unlimited expenses. Actors, musicians, athletes, entrepreneurs, you name it, and there are several of them, that have experienced financial troubles. The good thing is that most of them know how to manage debt and stay out of the trap and you can take lessons from them.
Budgeting is essential
A little bit of budgeting is all you need to do to stay out of the debt trap. It will help you go a long way, and you can avoid filing for bankruptcy. Keep a close eye on your expenses to avoid falling into unmanageable situations. Irrespective of how much you earn, the following budgeting tips will help you in your debt management plan.
- Put a plan – You must have and follow a strategic plan so that you do not lose your sleep over finances. You will get a good night’s sleep only if you figure out where your money should go long before it ends up in your bank account. If you spend without a plan, you may have unpremeditated consequences, even if it is just a one-time splurging event. This does not mean you will deprive and never treat yourself. Just make sure that when you do, you must not spend money faster than you can earn. Simple!
- Set up fun funds – Often a multiple of “fun funds” can help you in making a splurge on perks each month. Consider what else is there in the following days adjust each of these funds accordingly. The best way to budget your expenses is to download a budgeting app to see easily where you are in that month and what else needs to be done to stay in budget. Review and analyze your budget and check reviews and analytics of previous months to see whether any areas need amendments.
- Carry some cash – Stop relying on and using those plastic cards always and every time. Instead move around with cash for a change and for regulating your spending spree. Though credit cards seem to be the most convenient way of making payments for your purchases, it can have serious consequences and damage your financial health. Moreover, credit cards usually provide you with a wrong sense of security.
- Curb impulse spending – Wisest way to stay on the right track in your financial journey is to curb some of your spendings. Sit down with a cool head with your budget and you will find items more than one that you could have done without this month. If you can curtail some money, you can create an emergency fund with it as well to either deal with emergency situations like a car repair. You may also keep it as your debt repayment fund every month. This means that chances of falling into debt hole will significantly start to dwindle.
Rely on an expert
You may be an expert in preparing a project for your office considering all financial and other factors, or you may be a computer wizard, but when it comes to managing personal finance, most experts fall out of track. It is all due to the impulsive nature that results in unnecessary and most of the time unwanted expenses. This results in spending more than you earn and thereby in one or multiple loans in various forms.
Managing all these loans at a time needs patience and diligence, but the most significant thing that you required is a plan that will be proper, appropriate considering your cash flow and result driven in the end, sooner or later. This is work for the debt counselor or any debt management consultancy.
Invest in life coaches
No matter how strange it may sound to you, it is true that an expert financial and life coach can help you in your debt management endeavor. Investing in such coaches may not have direct influence in repaying your debt, but they will surely influence your behavior which is the prime reason for extravagance and unreasonable acts such as luxuriating without having enough means to handle it.
These coaches will put you and therefore your finance in the right track to achieve your budgeting goals. You will undergo a personalized and comprehensive coaching program to conduct budget reviews, remain accountable, make proper decisions, modify your spending habits and invest in productive sources. You will see the changes in your spending habit long before the program comes to fruition.