When people live with constant credit card debt it’s difficult to be laser focused on living within your means and thinking productively about one’s personal finances. In comparison those who live without credit card debt most often have clear financial plans and routines to ensure they live within their means. Why is this? It’s analogous to someone who is in great physical shape and constantly goes to the gym and watches what they eat vs. someone who “let’s themselves go” and therefore never exercises nor pays attention to their diet.
There is an emotional component to managing ones finances. And the heavy burden of carrying credit card debt (similar to carrying extra weight) often causes a level of emotional pain which results in an “avoidance” approach. Instead people work to “just get by” paycheck to paycheck and month to month or play the lottery “hoping” for a miracle. To look at the mounting credit card debt and their inability to effectively pay down large sums of the balances just becomes too difficult to think about at some point.
So before you can begin living within your means you really need to eliminate ALL of your credit card debt. If you don’t have access to large sums of savings to completely payoff credit card debt, pursuing low cost debt negotiation (often referred to as debt settlement) with your creditors is most often the best option. Low cost debt negotiation refers to avoiding debt settlement companies that charge ridiculous fees. Instead educate yourself how to do this effectively by yourself as thousands of others have effectively done (visit www.BlueDebt.org for more information on how to do this).
Once you have successfully paid off all of your credit card debt leveraging debt negotiation, it’s important that you effectively manage your finances going forward to ensure you live within your means. One “built in advantage” you’ll have post debt negotiation is that your credit will take a temporary “hit” where you’ll have less access to revolving credit typically. For some this sounds like a negative. But the reality is it’s most often the access to easy credit that got people into credit card debt trouble in the first place.
So post debt negotiation you’ll finally be in a situation where you’ll need to have monthly accountability to your cash flows. Meaning that you’ll need to ensure your cash outflows (spending) each month are less than your cash inflows (income) each month. With this dynamic you really start to look closely at what you’re spending each month as you don’t have the alternative to just run back up your credit card balances. The nice thing is though with no more monthly credit payments and interest charges living within your means is more attainable than ever.
Once you’ve established a financial routine to ensure positive cash flows each month, the next step will be to begin building savings again where the savings both contribute to your long-term financial objectives and act as your short-term back-up plan for unexpected expenses.