There is no better feeling than the feeling of complete control. Many people get this feeling when they finally pay off all their credit cards. However, many people who get out of debt often rebound right back into the same pattern of charging things to credit cards, and then making only the minimum payments.
Money Starvation
You know why they say most people fail on diets? It's because they restrict themselves so much they become obsessed with food. If you say I am not going to eat ice cream ever again, all you think about is ice cream and you end up eating pints of Ben and Jerry's. Setting a budget is just like going on a diet, many fail because it is too restrictive. If you count every cent you spend and refuse to by that cheese because you don't have a coupon, you are going to become so obsessed with saving money, that eventually, in the end, you will have a money binge, spending way more than you should. This is how many people who have gotten out of debt, have found themselves in the same situation just years later.
Closure
Another reason why people end up back in debt is that even though they pay off their debt, very few of them actually close their credit cards. Many financial advisors tell people that they need to keep cards open in order to keep credit history. So the cards stay untouched for a while, then one thing gets put on, then another, and before you know it, they are almost maxed-out and you are in the same position again.
What Works
There are things that a person can do to ensure that they will get out of debt and stay out permanently. First of all, after you pay a card off, cancel it. You do want to have some open credit, but you don't need ten credit cards to prove that you are credit worthy, especially if they are for department stores. Owning cell phones, making car payments, and even mortgage payments will all also help your credit. Besides, having several inquiries on your record doesn't look good either. Get on a good budget and stick to it. Allow for things like emergencies as well as impulse purchases. In order to succeed on debt, you have to be flexible. Finally, be honest with yourself. How did you get into debt? Was it medical bills, or just a bad case of the gimmes? If it was the latter, talk to a financial advisor to help you better plan for luxury purchases. |
