Living by the moment is the spirit of modern lifestyle which depends on instant gratification. People are not ready to wait for something that they want to have. Everything that one feels like having is now readily available by using credit cards and other options of availing quick loans. The line between wants and needs has vanished as everything that one desires to own or enjoy has become a kind of essential requirement at that moment that people are willing to acquire at any cost. All this is happening because money is now easily available. The attitude has led to a culture of living on loans or borrowed money that helps to spend at will to fulfill the desires of life that had earlier remained out-of-bounds, mainly for financial reasons.
Depending on debt to avail life choices is the way people seek happiness by leading a life that they dream about. Luxurious spending is no more the prerogative of the elite and wealthy because, with easy debts, anyone can now enjoy luxurious living even for a few days. Although it is debatable whether money alone can bring longtime happiness in life, people want to be happy for the moment. It is evident from the high spending that people indulge in when visiting Las Vegas, considered by many as the ultimate destination for fun and enjoyment.
The famous casinos and the flamboyant nightlife of the Sin City contribute handsomely to the tourism-related economic activities that generated a whopping $60 billion in 2016. The figure includes direct spending by tourists as well as the spending on tourism employees and the indirect impact on suppliers. The spending by tourists on account of hotel rooms, restaurants, tours and souvenirs in 2016 was $35.5 billion. The money that tourists spend in Las Vegas is much more than on other travels, but they do not mind it at all because they need not worry for money that is available from credit cards and other debts.
Willpower to control spending does not work anymore
Finance has become so much abstracted in these days of advanced technology, and plastic money is so attractive that people do not think twice before spending. Most people are either unaware or unable to comprehend the implications of mindless spending based on continuous borrowing. This seems evident because when you handover someone a $20 bill, you are aware of all the aspects of the exchange. You can visualize the transaction and money movement that makes you aware of the money flowing out from your account. In case of swiping a credit card or using a wallet for payment, the physical transaction happens behind the scene. Since the exchange process and money movements remain invisible, our minds are unable to figure it out thereby never letting you feel that you are spending money. It leads to uncontrolled spending and in turn too many debts.
Learn to live with debts
Living with multiple debts is the trait of modern lifestyle because during your life you will avail many types of debts from student loans to auto loans and credit card debt as well as mortgages. It is pointless to try to keep away from debts by depending on willpower to control unwanted spending because it turns into a futile exercise. Instead, a more pragmatic approach for life without worries is to learn how to live with debts by managing it well by keeping it under control. It begins by identifying the good debts from the bad ones and taking care of the bad debts first that carry high interest.
Good debts and bad debts
Good debts – All debts are not bad because some kinds of debts help to build your life on a positive note and drives it in the right track that can show the way to prosperity. Debts like student loans and mortgages are good debts because it becomes the financial pillars without which it would be difficult to go ahead in life. Education is essential for starting a career for which student loans come in handy. It is an investment to start a good life. Similarly, creating assets with mortgages add more value to your financial standing and enhances your net worth. Typically, these debts assure good returns in the long-term.
Bad debts – Car loans and credit card debts, both carry high-interest rates and only help in providing some momentary mental satisfaction of buying or enjoying something without long-term benefits. Such debts are like candlelight that creates a romantic environment to please the mind and senses for some moments only until the candle burns. This type of loans or debts involves high interest which hurts borrowers the most. Unfortunately, most of the woes of debts arise from these types of loans.
How to handle multiple debts smartly to keep it under control is what you must learn. This article should help you to handle debts confidently without ever letting it become overwhelming that can lead you to a debt trap and make life miserable.
Set your goals first
Having written down financial goals is very important because studies have shown that the rate of accomplishment of goals is 42% higher for people who write down the goals. Remember, that the results refer to all types of goals that you set in life and not financial goals alone. Indeed, the financial goals that you set must have a direct correlation to your life goals like education, buying a home, buying a car, etc. When you define what you want to achieve it becomes easy to link it to your financial goals and work towards accomplishing the tasks that help to achieve it. Set goals for both short-term and long-term.
Plan your borrowing
It is okay to borrow provided you are aware of why you are borrowing and how it will help your finances in the long run. Debts can be helpful to ease cash flow and provide elbow room to recoup your finances. Therefore, if you have a plan for borrowing by considering your paying ability, it should help to manage your finances better. However, you must limit the number of lenders because too many lenders can lead to unwanted stress in debt management and create a mess. That is what you must avoid by knowing how to manage multiple lenders efficiently to keep debts under control.
Have the will to keep debts under check
It is all in the mind when it comes to debt management because if you have the will to keep debts under control, it should not be hard to find a way for it. You should first understand why debts are a problem for you. Is it because the debts are too much that are difficult to repay or is it that the debts are within the manageable limit, but you are unable to manage it well. If it is the latter and you have a good credit score that indicates sound ability in making payments on time then perhaps debt consolidation is what any financial planner and debt consultant would recommend for you. It is a proven method for better debt relief that helps to handle debts with more ease and confidence and strengthens your finances in the long run.
Debt consolidation explained
When too many loans become a headache for you because the task of monitoring and servicing several loan accounts and handling multiple lenders seems just too much, it is perhaps the time to look at the option of debt consolidation. When you realize that you would be better off with just one or few lenders, then it makes enough sense to seek one big debt consolidation loan equivalent to the total balance outstanding and use it for paying off all other loans. It means that you will have only one loan that becomes easy to manage. Typically, you must target all high-interest loans and knock it off through the process of debt consolidation.
The method of consolidating debts gives you the opportunity of reorganizing multiple bills with varying interest rates and different due dates and payments so that you are more comfortable in carrying only one loan without compromising on your financial needs.
Life is easy with a single lender
The major stress relief from debt consolidation comes from a reduction in the number of lenders because it is easy to track one payment date instead of many and this ensures that are no missed payments. It is a great relief because you would no more receive a barrage of disturbing follow-up calls from lenders that can be a quite harrowing experience. Moreover, you get an opportunity of reducing the interest burden that all other loans carried because you can negotiate lower interest rates for the new loan that you take specifically for paying back other lenders. Effectively, you will be paying a lesser amount every month for availing the new loan that generates saving which is like the topping on the cake. What can be better than a single lender with lower repayment while enjoying the same financial support as earlier?
Consider alternatives before deciding to consolidate loans
Debt consolidation is just one of the many ways of seeking debt relief, and there are other methods that you must evaluate together with debt consolidation before you take a final call. By consolidating debts, you get the chance to roll all debts into one comprehensive debt, and it might appear an easy task, but it is not as easy as it seems to be. Convincing lenders and make them agree to accept foreclosure of the loan accounts needs some hard bargaining and excellent negotiating skills that might not be your forte. Besides, you must know where to find lenders that offer loans for debt consolidation only. Above all, you must be convinced that there was no better alternative to the decision that you have taken so that you do not regret later. You must weigh all other options before deciding to go ahead with debt consolidation.
Work with professional debt relief companies
As you can understand, there is a lot of professional guidance required in navigating through the process of debt consolidation that involves tackling several lenders. Since lending is their business, it is not easy to convince lenders to foreclose the accounts because it would hurt their business. To handle this problematic task efficiently and even to help you in identifying a new lender that offers better interest rates, you must work with some companies that provide services in debt settlement and debt relief. The professional financial advisers of these companies have enough experience in debt consolidation and know how to deal with lenders that serve your best interest. Their advice would not only streamline debts but also give you an opportunity to reorganize your finances for a better future.
Get ready for consolidating debts
Your active participation in the process is necessary to implement the plans for debt consolidation successfully. You must be entirely convinced with the plans of consolidation that the professionals work out for you and know exactly how it fits into your overall financial plans. You must have the right frame of mind to implement it or else no matter how good the plan might be; the results would be elusive.
Often fiscal indiscipline is a reason for availing debts from multiple sources, and if you belong to this group, you must mend your ways and take a pledge for being more disciplined with loans. Keep a close watch on every spending so that you can figure out where the money goes, and the information should be useful in creating a realistic budget. This would ensure that you generate some surplus every month to pay back loans. By identifying the areas of unwanted expenses, you can remain within the budget and stop taking more loans.
Once you reduce the liability of debts by consolidating it, you must use the opportunity to strengthen your financial future by exercising better fiscal discipline.