Living debt free is something about which most people only dream, but debt can be either good or bad. Good debt is that which is beneficial and will grow in value, such as a mortgage on a home for your family. On the other hand, bad debt is that which loses value, such as clothes or cars. When people think of debt-free living, generally they are talking about having no credit card debt and no car payments, AKA no bad debt. Revolving credit is very bad for the bottom line because it has no fixed payment and no payoff date. The credit bureaus determine a creditor’s responsibility factor by checking their credit limit on various loans and how much they have borrowed against them.
Our society is credit-obsessed, and that is mainly due to its ready accessibility. Credit is so easily attainable that it drives the desire to obtain more and more possessions, and people want instant gratification. In general, they can do without most of these “things.” Usually, people do not want to wait long enough to decide if they really want the item or whether they can really afford it. They want it immediately. By the time they leave the store with the item, it is already valueless.
Waste seems to be rampant in our culture. The feeling that they deserve the best of everything, including food, clothing, cars and vacations, keeps people from living debt free. Using credit rather than cash psychologically removes them from the payment; otherwise, they would think twice before making purchases they may not need.
Companies that consolidate debt, such as Hornet Partners, may be able to assist in getting out of debt; however, that will only be beneficial if they are willing to be responsible with their finances once they have started on the road to debt relief. Keeping their credit score intact is as important as paying off debt. Poor credit scores could negatively impact their ability to get a job, and they may have to pay more for necessities, such as insurance and rent.
Hornet Partners offer advice and debt consolidation when potential clients are struggling with high interest rates from different types of loans. Consolidating unsecured loans will roll many single debts into one sum with monthly payments that are fixed. Having a good credit score may allow them to consolidate with a lower interest rate and pay off debt sooner. Their individual situation and the type of debt will help determine whether consolidation is a good idea. Hornet Partners can help them establish whether this relief could affect their credit score. It will likely improve because, rather than having many different credit cards with separate monthly bills, there will be one loan at a lower interest rate, resulting in much higher odds of successfully making payments and eventually be debt-free.
Many benefits await those who are able to free themselves from debt. They will feel less pressure to work at a job that is not enjoyable and will feel less anxious, leading to an improved outlook on life. Without a lot of debt, they can save more money and perhaps retire earlier. They do not have to feel poor in spirit, but can feel free to go out for meals, or take vacations, or buy the things that will improve their lives. Responsible use of credit allows them to use those credit cards and still stay out of debt if they only charge what they can afford to pay each time the bill arrives.
Watching the credit card balance inch upward each month is an uncomfortable feeling, especially if the credit card company or a collection agency is calling frequently. Following a realistic budget can help get them back on track and allow them to put money aside, especially for an emergency. That, alone, will help give peace of mind and motivation to put their financial affairs in order.
Other tips that will help with spending are: Do not give expensive gifts to family, shop from a list rather than going willy-nilly about the store, keep track of spending, and avoid wasting food and time. Spend much less than what is earned and be patient enough to save for costly items rather than charging them now.
Always keep an eye down the road so that current plans are aligned with plans for later life.
In addition, multiple streams of income can be a wonderful way to improve finances. Finding different ways to bring in extra money is good for the nerves as well as the bottom line. Finally, live the best life now. Being stressed over debt will not allow time for relaxation and enjoyment of life.