When you first start out a family and bring in the new home, you’re willing to take on a little debt. As many economists frequently say, a little debt is good. Debt allows you to grow for a short while and usually it’s needed when you’re at the most urgent or important part of your life. Well, starting a family and buying a new home do of course tick those two boxes. However, what happens for many families is, they decide to have more children and thus they need to move to a bigger house. This also prevents one parent from working for a while which means you now have a one income household. Pretty soon those debts that you thought could be easily kept in check, spiral out of control. You’re constantly trying to climb over the mountain of bills you now have so you can start to live a normal life again. But here’s how you reach the summit successfully.
The altar of hard times
It’s best to just own up to the situation and admit you are at the altar of hard times. You will need to acknowledge that making sacrifices is just going to have to be the norm. But only for a while. If you can skip this year’s holiday, if you can wait a while before buying a new car, then you will slowly begin to accumulate more money toward the bills. If you have children then asking them to be more careful with their clothes so they last longer is sensibly going to help too. Make sure you cut and save everywhere you can on your weekly grocery shop. Instead of turning the heat on, you put more layers on. Make sure the family is using hot water prudently and not wasting it.
Readjust your rates
The first thing you need to do when you’re debt is growing is to change your lifestyle. As mentioned, making sacrifices is how you do that. But, sometimes you also need to just pump the brakes on the bills themselves. Try to see if you can readjust your mortgage rate from your creditors. Look at ways to refinance home loan such as increasing the years and lowering the monthly payments. Perhaps your income circumstances have changed such as getting a promotion at your work and earning more than you did when you first took the home loan out. You can use this leverage to lower the payments and give yourself some breathing room. As your life situation changes, so should the loans you have.
Savings are outgoing too
As much as you may not like to see it this way, but savings are outgoing too. You should already have a buffer of at least 6 months of wages saved up in case of an emergency. If this is the case, then it’s wise to stop putting away the usual money you would save and use it to pay off bills.
In the beginning debt that is manageable isn’t a problem. But as our lives change so too does the debt we owe. Be ready to make sacrifices and stave off from saving just for the moment until your debt is under control.