When I got into all of my debt I knew it was wrong and really I didn't like getting in debt at all. I acually wanted to stop the financial bleeding, but personal reasons with my ex-wife were a main part of the problem. Then again was I addicted to the debt or was I addicted to the things money(or debt)allowed me to buy or do.
STEP #4
People who are in debt are addicted to something, whether it be overspending, material things, or the misery being in debt brings. The inappropriate use of credit cards is usually the main reason people have major debt problems. When your checkbook balance is low and your wallet is empty you just want to move on to the credit cards. Once you move over to the credit cards you can just start overspending. Why is this? The main reason is you usually don't even know what your spending or spent until you get your credit card statement. You know that you open that envelope and say, "Wow! I spent that much?", and of course you do it again next month. Don't you?
It requires constant planning and monitoring to maintain good credit management. Look at your current credit situation. Do you know how much you put on your credit cards each month? Do you know the total amount of payments you make to all of your creditors each month? Do you have enough income to pay all of your creditors each month? Your total debt should not exceed ten percent of your income. Do you have an emergency fund for financial emergencies like job loss or sudden illness? Eight months of income is recommended to have in your emergency savings account.
If your entire credit picture is not entirely laid out in your mind, it's time to start getting things straight in your head and figure out where you are going with your finances. Living beyond your means and overspending are a sign of lack of awareness, self control, and commitment. They only lead to excessive debt. Use the debt calculator at CNNMoney.com to see exactly when you will be debt free.
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