Dealing with debt in 2012 is pretty much like dealing with debt any other time and this means that it is still not a fun topic. But it must be done so you need new perspectives, new ideas, and fresh inspiration. You most likely know how to deal with the debt you have. Don’t spend money you don’t have and cut back on every expense that you possibly can. But to really deal with debt you also have to prepare for the inevitable financial bumps along the way. Otherwise, you could be thrown off track in your efforts to deal with debt.
Stop Debt And Save Money
If you are already committed to a plan that will lead you out of debt then you will undoubtedly wonder where you will get extra money that you can put away and save. You can either find more sources of income or you can cut back more but saving money at all times is essential. Unexpected expenses happen to everyone and this is one instance where it pays to expect the unexpected.
You do not want to be caught unawares by these sudden expenses so you have to have money set aside to help soften their impact. Do not think of this as less money in your budget now but as a reassurance that no matter what happens you will have funds set aside to deal with it. Ideally, you will want to build this fund up to at least the equivalent of 6 months of living expenses.
Make Your Payments Automatic
Making all your payments automatic has a number of benefits. Automatic payments just make bill paying easier but they also make sure that you do not make late payments that can come with steep late fees. They can also help you to avoid the increased interest rates that can come with late payments on credit cards.
Automatic payments can also be used for the savings account that was described above. By having the money taken out automatically, you ensure that you don’t accidentally spend the money that was destined for savings on something else. There will always be a good reason to spend that leftover money somewhere. Don’t give yourself the chance.
Plan To Pay Off Your Debt With Money You Don’t Have Yet
Just like there will be unexpected expenses in life, so too will there be sudden windfalls. Decide how to spend this money before you get it. The easiest way to plan spending this money is to put it all toward your debt so that you make great leaps of progress in your efforts whenever this money comes in.
How will extra money find its way into your life? It could be through a raise, a bonus, a tax refund, or it could come from some other source. However it enters into your life, know that this money is already earmarked to pay off your debt. Deciding this ahead of time will help you to avoid the temptation to spend these monies frivolously when they could be doing more important things.
To deal with debt in 2012, you have to plan for the future. You need savings that will protect you from unexpected expenses and automatic payments to make sure that the money you have coming in gets to where it should go. And you need to plan to spend any extra income to pay off your debt. You can splurge after that’s done.