You need to overcome certain debt relief issues if you really want to achieve debt freedom. Most people would start paying off their debts with a lot of passion and aggressiveness. In fact, a survey revealed that 34% of those with financial goals plan to focus on paying off debt.
Fueled by the idea of starting fresh, these people will make all the effort to reach their goals. But despite their best intentions, not everyone will succeed. Over time, some will lose their traction. They will start to falter. Those who started with so much commitment to get out of debt will struggle to keep up with payments.
Have you ever wondered why this happens? There is an explanation.
Debt relief does not happen overnight. It is a process and it oftentimes takes years to pay off completely. You may have started aggressively because you had the right financial situation to make it happen. But over time, things will change. Your situation will change. It can affect your ability to meet payments.
If change is inevitable, how can you protect your efforts to get out of debt?
Simple. You need to make sure there are no debt relief issues that will compromise your efforts.
3 debt relief issues you need to overcome to be debt-free
When you are trying to achieve anything, there will always be obstacles that will try to keep you from reaching your goals successfully. If you want to be successful, you have to prepare for these issues even before you start working on your goals and targets. There is no saying if you can prevent the problems from happening. But you can prepare yourself to survive these issues in case they do.
Of course, before you can make preparations, you need to know what these debt relief issues are. Here are the three common issues that you need to work on to get out of debt successfully.
Unrealistic payment expectations
We all want to be free from debts immediately. To make that happen, we set unrealistic monthly payments for ourselves. After all, people say that the more you pay each month, the faster you can get out of debt. But if it is not realistic, this will not work for you. It is helpful to pay a lot towards your debts. However, if it will make you miserable, then it can compromise your ability to pay. It can stress you out. It can keep you from allocating enough budget on your other expenses. If you burn out, you might make irrational decisions like splurging on something. You will justify your action by saying that you had been suffering because of your debt payments. You deserve a break!
Giving yourself a reprieve should not be a part of your debt relief program. You can give yourself a reward – but only after completing milestones. If you are doing it because you want a break from the tough debt payments, then you are doing something wrong.
Failing to stick to the plan
One of the debt relief issues that cause people to fail is their inability to stick to the plan. According to a report, 20% of American adults had difficulty keeping up with debt and they consider it a financial setback. There are many reasons why you fail to stick to the plan. One is because you have set unrealistic expectations. But it is also possible that you are finding it hard to stick to your plans because you chose the wrong debt relief program.
There are many people who rush through the debt relief process without considering all their options. Just because the first debt relief program you encountered is getting good reviews, it does not mean it is perfect for you. If you choose the wrong option, there is a high chance that you will end up making your debt situation worse.
Feeling too complacent
Finally, you need to make sure you avoid feeling too complacent about your debt situation. There are people who feel like they can already start using their credit cards after making a couple of payments. There are also those who relax their restraint on spending urges. All because they feel like they deserve to spend as a reward for being responsible about their debt situation.
The truth is, you do deserve a reward for taking steps to deal with your mounting debt. However, if this reward will only put you further in debt, or compromise your debt payments, it is not a good idea.
Imagine your debt to be like the water inside a bucket. You try to empty it by scooping the water out (e.g paying your debts monthly). But no matter how many times you scoop the water out, if you do not turn off the faucet, it will never empty. This is what happens when you keep on using a credit or when you are still irresponsible with how you use your money. You will never run out of debts to pay. So just because you have made a couple of payments toward your debts, do not feel complacent. Your financial situation is not yet okay.
How to solve common debt relief issues
There are a lot of other debt relief issues that you need to be wary of. If not, you might end up compromising the progress that you already made. Instead of moving forward, you will be held back by these issues.
So what can you do? Here are some tips that you can use if you want to solve these common debt relief issues.
Consult your budget plan
One of the issues mentioned involves setting unrealistic payment expectations. When you are coming up with a debt relief plan, it is important for you to consult your budget first. Do not just look at your income. You need to consider your expenses too. Make sure that your debt payment capability is not based on a guess. It should be based on what your budget tells you that you can afford.
If you really want to be successful with debt relief, you have to create a working budget. This is a budget plan that is constantly changing based on what goes on in your life. If you get a raise, change your budget plan. If you get windfall money, do the same. In case there is a new expense (e.g. medications), include it in your budget. By being honest with your payment capabilities, you are making sure that your debt relief program will be affordable. It will make the whole repayment plan easier to complete.
Choose the right debt relief program
It is also important for you to choose the right program that compliments your financial situation. Before you decide, consult your budget first. How much can you really afford to pay for your debts? You should also ask yourself, what are your future plans? What do you want to happen after you have paid off your debts?
The answer to these questions will help you choose the right debt relief program. Even if you can afford the payments, you should also ensure that your debt solution will not compromise your future plans. Like if you want to buy a house after you have paid off your debts, you need to choose a debt solution that will get you closer to that goal. For instance, the debt relief program should allow you to save money for the down payment of the house.
Learn how to spend wisely
One of the debt relief issues discussed is about being too complacent. It is okay to feel this to keep your debt stress levels down. However, you should not overdo it. Obviously, we all need to spend money. We still live in a consumerist society. But to protect your debt relief efforts, you have to learn how to spend your money wisely.
It all starts with budgeting. Make sure you set your lifestyle in such a way that makes you spend below your income. This will give you enough extra money to help improve your financial situation through savings and investments. The extra money will also be useful when you face unexpected expenses. It will effectively keep you from using more credit. Not only that, it will help protect your debt payment fund from being spent on unnecessary things. Because of that, the chances of completing your debt relief program will be higher.