How To Manage Your Debt In A Responsible Way

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Let’s face it, when the topic of debt comes up, what really bothers us is our own debt. We’re bothered by feelings of guilt and shame, as well as the discomfort we feel when confronted by a self-righteous credit collection representative who has been coached on how to trigger our emotional buttons to get us to pay back the debt quickly.

Unfortunately, despite your frugal lifestyle and your perfectly balanced budget, you may still have to go into debt now and again for reasons that you have little control over. Perhaps your car breaks down or your bathroom plumbing springs a leak. You have to go into debt to resolve these emergencies. You can’t quit your job because you don’t have a car and you can’t let the water run all over your house until you get your next paycheck. You have to take immediate action before a bad situation gets even worse.

Take, for instance, using an alternative lender to pay for your emergency car repair or broken plumbing. Is that a bad thing to do? No, it’s just a necessary thing—a fact of life in the modern world, a consequence of an economy where the cost of living usually exceeds our rate of income and ability to save enough from each paycheck. If you use a payday loan alternative lender like BlueTrustLoans, you can do your part by paying them back from your next paycheck or paychecks.

So debt per se isn’t bad, provided you borrow responsibly when opting to take out a short-term loan. Besides the mistake of feeling guilt and shame over an unexpected debt, which doesn’t really do any good at all, the biggest mistake you can make is not repaying your debt as quickly as possible and let it get even larger. Getting increasingly deeper into debt can cause you to lose everything.

With that in mind, here are 3 common mistakes people make when it comes to managing debt:

Getting into debt for the wrong reasons.

We live in a consumer culture where we’re surrounded by all sorts of temptations—beautiful cars available for small monthly down payments, mortgage lenders who approve us for loans we don’t deserve based on our income levels, lovely clothes that we can put on our credit cards, and so on. Within a year, you could be wearing the best clothes, living in a fine house, and driving a beautiful car—but doing it all on credit. Eventually, the pressure of paying more than you earn will cause you to feel completely burned out. Yes, you might impress your family and friends, but you have to pay a high price for the illusion of appearing to be wealthy.

Getting into debt to pay off debt.

When you borrow money, you don’t just pay for what you borrowed, you’re paying surcharges and fees and interest. When you can’t meet your minimum payment, you might resort to desperate tactics like opening more credit cards or taking out some more high-interest bank loans. Although these techniques of rolling over borrowed money might provide temporary relief, this doesn’t solve the problem but only makes it worse.

Letting your debt ruin your chances for attaining financial independence.

Even if you earn a great salary or run a highly profitable business, but spend more than you earn, everything will go up in smoke should you lose your job or your business stops being profitable. If you did not have the debt, you could have built up a steady passive income through investments and slowly created financial independence.

It’s All about Responsibility

The idea of debt as a bad thing is not true because sometimes you have no choice. However, you do have a choice to act responsibly, pay back what you owe, and avoid getting into debt by living above your means. Debt itself is not the problem; it’s poor financial management after you borrow money.

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