Debt can be a significant cause of stress if it is not dealt with properly. Debt has been know to cause healthy people pain and suffering when they are unable to pay their bills on time or not at all. Both physical and mental issues can arise while under the stressed caused by debt including, ulcers, anxiety, depression, and so on. Unfortunately, there is no way to live without debt, whether you are buying a house or a vehicle or putting your kids though university it is very difficult to live debt free these days.

The best way to think of of debt is by good debt and bad debt, examples of good debt include a mortgage, as you pay down the mortgage equity is being built to the point where the value of the house is more than the debt. Bad debt on the other hand, like credit card debt is the reverse, the amount of interest paid far out weighs the benefit of the debt occurred. With a few simple changes removing bad debt can be a fairly simple task.

1) Use Cash

The simplest way to remove bad debt is to stop using credit cards and switch to just using cash. Set a certain amount aside each month or payday for everyday expenditures and stick to that amount.

2) Write it down

If you spend a penny write down where is goes, it is very tough to know where you are going if you do not know where you have been. By writing down where you spend your money you will be able pick out patterns and see areas that can be reduced, like coffee or snacks.

3) Don’t be concerned with fixed costs

Fixed costs like mortgage or rent, utilities, car payment, student loans, food, etc are expenses you cannot live without so worrying over these or trying to reduce them is a waste of time. Concentrate on the variable costs, credit cards, cash, etc.

4) Be Inventive

As you get use to writing everything down and seeing patterns in your spending start looking for ways to save money. Do your banking fees need to be $x a month? Are you getting full value for those fees? Making coffee and toasting a bagel in the morning instead of stopping at the coffee shop can save upwards of $500/yr.

5) Have Fun

Life is short, way too short to be worried over debt, make a plan to reduce spending and bad debt then stick to it. Once the plan is in place have some fun, don’t go out and break the bank on a vacation to the tropics or any thing like that. Adding a family activity once a week, an afternoon at the park and then ice cream is a great way of reducing the stress. Having debt does not mean the end of it all. Learn about your debt by finding out what how you spend your money. Make a plan for paying off the the debt you currently have, and finally avoid incurring more bad debt.

    Posted in Debt Consolidation from Investor on 31. Mar. 2010