Not many talk about the reasons why it is so difficult to get rid of debt and in this article, we will provide most common ones. We are all very much aware that lots of debt is terrible. There are several financial experts out there, teachers, blogs, including gurus who provide us with an in-depth insight regarding how to get out of debt and how long it takes to get out of debt.
Main reasons why it is so difficult to get rid of debt:
- The Sacrifice
- The Huge Interest Rates Takes a Huge Chunk of Your Payment
- You Want to Spend Like Others
- Failure of Others to Back Your Debt Repayment
- Due to Envisioned Expenses
- Failure to Change Lifestyle
- Insufficient Income
- Bad Orientation Regarding Saving
- Excessive Structural debt
- Bad Money Management
But why do you still find it very difficult to pay those debts of yours? Is it because of your attitude towards your debts? or Is it because you lack enough discipline to pay them off?
Why it is So Hard to Get Out of Debt?
Probably, but this isn’t true in all cases; there is actually more to it, and I am quite sure that after you are done with this article, you will have the best understanding regarding why you find it difficult to get out of that debt. If you find yourself deep in debt and you are finding it difficult to pay if off. having a good understanding of what you are up against is the prime step to tackling the problem; and only when you do that will you make any real headway.
Getting a student loan, a mortgage loan, a car loan, or any type of loan is certainly not as difficult as paying off a debt, irrespective of how huge or little it is. Paying off debt comes with several challenges, sleepless nights, ruined relationship, worries, financial restrictions, anxiety, etc. Debts really affect our wellbeing, which is why you need to ensure that you are aware of the reasons why many people find it hard to get out of debt, and work towards ensuring that you don’t make the same mistakes these people make.
If you are drowning in the sea of debt, and it doesn’t look like you are anywhere close to the surface; don’t fret, there are certain things to consider when drowning in debt that could help you resurface.
How do you simply tackle a problem? By knowing its cause, right? Definitely! That is the smartest way to tackle a problem. Now, imagine you are aware of those things that pose as a huge hindrance to clearing your debts, you will be better equipped knowledge-wise to clear away those hindrance and live a life of financial freedom, right? Of course! Now, sit back, relax and open up your mind as I provide you with the 10 reasons why getting out of that debt seems so difficult.
The Sacrifice:
People find it difficult to get out of debt because of the sacrifice that comes with the challenging process. Settling debts is all about strict spending and constant sacrifice. This is quite difficult because each day we will come across advertisements for goods and services you don’t need. Provided you are paying off debt, you have to be disciplined enough to ignore things such as clothes, vacations, gadgets, jewelry, that will affect your debt repayment process. Discipline yourself against making frequent spending on your credit cards.
Even after settling your debt, you still have to make certain sacrifice so you don’t fall back in debt again.
The Huge Interest Rates Takes a Huge Chunk of Your Payment:
Huge interest rate that comes with certain loans are one of the reasons why most people find it challenging to pay their debts. The bigger the borrowing rates, the longer it will take to get rid of your debt, because a huge chunk of your monthly payment would be directed at settling the expensive finance charges.
If you don’t want to get frustrated while paying off your debt, or if you don’t want to spend several years tackling that debt of yours, then you have two options. The first option is to raise your monthly payment or negotiate a favorable interest rate with your creditor. To negotiate a borrowing rate with your creditor, it is crucial that you have a good credit history. A good credit history can soothe the mind of your creditor and direct him to lessen your borrowing rate. A credit history is a record of your ability to repay debts.
You Want to Spend Like Others:
When you see your neighbor changing his car, remodeling his house, going on vacations and you, who is down with debts, want to follow suit, you will certainly find it challenging to pay those debts. When repaying a debt, you have to cut down spending to the minimum. This denotes that, no unnecessary purchases, no vacations, no new car, etc. Keep your credit cards away from your wallet (if necessary) so you don’t get tempted to spend always.
Have it in mind that you and your extravagant neighbor have different financial problem. While he can afford such luxury because he is probably in little or no debt, you simply can’t because you are deep in debt. Be strict with your spending so getting out of your financial predicament becomes quite easy. It is ok to spend during this period, just ensure that whatever you are buying is small and significant.
Failure of Others to Back Your Debt Repayment:
You will certainly find it hard to get out of debt when your spouse, girlfriend/ boyfriend, and children fail to support your debt repayment. If these people choose not to adjust to lifestyle changes for the sake of settling your debt, then you will have a big problem paying off that debt.
Repaying a debt isn’t easy. You will surely need the encouragement and support of everyone around you to pull out of the debt. Make your children, spouse, girlfriend/ boyfriend understand your financial situation and the decisions you take. For instance, if you choose to terminate the cable TV, the family will have to search for an alternative way to keep themselves entertained.
Due to Envisioned Expenses:
People find it challenging to pay off debt because of unexpected expenses. When these expenses arises, they have no choice but to halt their debt repayment and focus on the expenses. After they must have taken care of the expenses, they realize that they have little or no cash left to settle their debt, which could be a credit card debt, car loan, etc.
Though, you may take the necessary steps to protect yourself from envisioned expenses, but sometimes, you will have to deal with something you didn’t plan for. That is why it is key to have an emergency fund. An emergency fund is a fund that is set aside for emergency situations such as unexpected expenses. It prevents you from borrowing cash when faced with certain envisioned expenses.
Failure to Change Lifestyle:
Most individuals find it difficult to get out of debt because of a lifestyle they refuse to change. Imagine being stuck with a huge credit card debt, but yet you choose go to the boutique or mall every four days interval. Such a person would surely find it difficult to pay off his or her debt because he refused to change a lifestyle that makes him spend more on unnecessary things.
To pay off your debts in no time, with less effort, you have to alter your lifestyle. Spend less cash and cut out unnecessary spending. Your credit card should be on strict usage. Of a truth, getting out of debt is not quite difficult if we apply the right tactics and discipline ourselves well enough.
Insufficient Income:
Excessive debt is one of the results of making expenses that are higher than your income. Boosting your income is also one of the many things you have to consider when in debt and need money. To pay off your debts, you need to have sufficient income to cater for yourself (and family if you have one) and settle your debts gradually. If your income is quite little, settling your debt will be very difficult due to lack of adequate funds.
A sane person wouldn’t go hungry all day simply because he has as debt to settle. Imagine having a card debt of $50000 and earning a salary of $300 per month. If you deduct the money that would be required for your upkeep and other important things from $300, how much would you have left to settle your $50000 debt? This is certainly one of the biggest reasons why most people find it difficult to settle their debt.
If peradventure you find yourself drowning in a $50000 debt, then there are some simple steps to take in order to pay off $50,000 debt in a year.
Bad Orientation Regarding Saving:
When it comes to saving money, Americans are very bad at it and they eventually pay a hefty price for lacking such beneficial ability. If you find it difficult to save a little amount of money every month, you will surely find it difficult to get rid of your debt. Getting out of debt involves managing your money optimally.
If you have bad money management skill, you will surely find it difficult to save. Without savings, or emergency fund you would have no choice than to tamper with the cash meant to settle your debt when emergency situations arises. Also, ensure you restrict how you use your credit cards.
Excessive Structural debt:
People so cherish taking too much structural debt. Student loans, mortgages are popularly known as “good debt” but these debt are known to be the bedrock of more debt. They are regarded as long term debt and they create the need to acquire more money later. Having lots of this debt can make it difficult to pull out from the other debts you owe.
Mortgages and student loans can work if you don’t spend money too much. For several people, though, mortgages and student loans give room for a life of indebtedness.
Bad Money Management:
Surely, if you manage your money in a bad way, you will be stuck in debt for a long time, probably till you master the skill of money management. Money management comes with being able to differentiate between your need and want. If you use spend lots of money partying, you have to stop it due to your debt.
Imagine having a debt of $100,000 and spending $500 each month partying? That is poor money management. If you continue with such habit, getting out of debt would be quite difficult for you. Create a budget that involves less spending and stick to it, religiously.
How to End the Debt Cycle and Become Financially Free?
The best way to handle excessive debt is to stay away from it, absolutely! But, there exist some ways that those who have excess debt on their neck can lessen or eliminate those debts.
However, to get out of debt, you need discipline, determination and you have to be willing to make important sacrifices. Do not draw out your credit card and buy whatever catches your eyes, you will go broke in a jiffy and would have no choice but to borrow. According to credit experts, there are some effective ways in which borrowers can take charge of their debts. Even if you have a debt of $50,000, there are some steps to take in order to repay a debt as huge as $50,000 in a year.
Create a Repayment Method While Cutting Down Monthly Expenses:
The first step to take in order to take charge of your finances is to access your current position and consider reducing some expenses.
Some of the steps are quite difficult and can be handled without much stress, while others involves little sacrifices. Below are few things to consider.
Eliminate Cable or Satellite TV Including Cell Phone Cost:
This is certainly a difficult undertaking because those companies have contracts that are difficult to come out of. But as soon as the contract expires, make move to lessen monthly costs. Lessen the number of channels in a TV package, for instance, or lessen the dependency on cellphone.
Kill the Urge to Always Move Around With Your Credit Card:
We are humans. We often get moved by what we see. Whenever we go out and we see something nice, we always want to get it, even if we don’t really need it. Keeping your credit cards at home when you are quite sure that you won’t be purchasing anything important is a good step to make sure that you spend wisely.
Don’t be in a haste to pull out your credit card when you see something you like. Be disciplined enough to use your card at the right time.
Cut Down How You Eat Outside:
The more you eat outside, then you discover the more you spend your money. Based on a recent study, millennial today spend almost 45 % of their food budget eating out. By making your meals in your home can reduce the amount of cash you spend on food every month.
There are mistakes people make when trying to settle debts quickly on their own. These mistakes eventually makes it difficult for them to settle their debts and enjoy a life of financial bliss. It is therefore recommended that you consult an expert if you are overwhelmed by your huge debts and you don’t know the next step to take.
Paying off debt can be difficult but it is very much possible, irrespective of the debt size. If you are overwhelmed by your credit score, or your debt, you can get professional help. Professional help can be help from experts who are accustomed to everything about debts and can provide solution for your financial situation. Several people have met such professionals and these people have helped them out of their debts. There are also some top organizations in the US that helps families financially. You can contact them for any financial assistance.
