Burning debt with dollars: How to manage your family and life

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Burning debt with dollars: How to manage your family and life
“People should watch out for three things: avoid a major addiction, don’t get so deeply into debt that it controls your life, and don’t start your family before you are ready to settle down”.

Family can be your biggest strength or weakness when you’re in debt depending on how well you manage it. When your family understands your debt problems and cooperates with you, it becomes your biggest strength. But when your family refuses to cooperate, it becomes your biggest weakness.

If you want to burn debt with dollars, you have to reduce household expenses, lead a frugal lifestyle, and generate extra cash for paying off debts. Obviously, you need full family cooperation for this. The onus is on you to convince your family. The onus is on you to make major lifestyle changes and reduce household expenditures.

How to burn debt and manage family

Here’s how you can burn debt with dollars and manage your family and life.

1Discuss your debt problems:

Debt is a personal and a sensitive issue. You may feel that your family will judge you due to your debt problems. You may not feel comfortable talking about your debt problems. Still, you have to do it for the benefit of your entire family.

Sit with your family and explain the scenario that got you into debt. Don’t hide anything. Tell them how much you owe and ask for help.

If your family loves you, they will help you to deal with this problem. Work together as a team and try to get rid of debt as soon as possible.

2Set a goal and create a road map:

Your family members are aware of your debt problems. Sit together and set a financial goal. For instance: your goal can be to pay off your debts in the next 2 years. Chalk out a plan to reach your financial goal. Talk about the pros and cons of the plan and then think about the strategies to implement the plan.

Financial Plan A Financial Plan B
  • Create a household budget
  • Cut expenses at every corner
  • Move into a small apartment
  • Take up new assignments in the weekend
  • Negotiate with creditors for a lower payoff amount
  • Create a household budget
  • Cut expenses at every corner
  • Move into a small apartment
  • Take up a new job with a better pay scale
  • Approach a debt relief company for getting a lower payoff amount
This is just an example to give you a brief idea about financial plans.

3Create a household budget:

This is a must. A household budget helps you know if your family is spending more than your monthly income. It helps you discover the areas where you need to cut down expenses.

When you’re in debt, it’s important to save money. You need extra money to pay off your debts as soon as possible. Set a budget for every category - food, clothes, accessories, entertainment, healthcare, and miscellaneous expenses. Make sure your entire family is spending less than what you earn.

4Ask your family to live frugally:

Forget the luxurious lifestyle you lead in the past. Ask your family members to lead a frugal lifestyle for saving dollars. Here are a few tips that can help you lead a frugal lifestyle:

  1. Install a CFL bulb in your room.
  2. Use coupons and deals for shopping
  3. Use apps on your smartphone to find the best deals
  4. Opt for a cheaper cell phone plan
  5. Negotiate with your insurer for a lower premium
  6. Cook meals at home. Stop eating at restaurants
  7. Shop with a grocery list
  8. Ask a student of a beauty school for a free haircut
  9. Sell your old things to get more money
  10. Be on a cash-only diet
  11. Try a spending freeze
  12. Download books and online courses for free
  13. Cancel subscriptions for magazines
  14. Travel by bus or bicycle
  15. Use natural cleaning agents to sparkle your kitchen
  16. Unplug unused electrical devices
  17. Unsubscribe from club memberships
  18. Watch out for cheap entertainment options
  19. Buy generic goods instead of branded ones

5Teach money lessons to your kids:

Kids are your future generation. Teach basic money lessons to them so that they can help your family save money. Teach them the basic concepts of spending, saving, and sharing. Explain why it’s important to save money. Talk about the ways to save money so that they can also contribute towards family savings. For instance, they can borrow books from the library instead of buying them. Besides, they can collect coupons every week. You can use them for shopping later.

6Create an emergency fund:

Unexpected expenses can come up anytime. If you’re not ready for it, your debt problems will aggravate and ruin all your plans. The smartest way to be prepared for unexpected expenses is to create 2 emergency funds.

The first emergency fund should be small and the second one should be big. Use the first one as a rainy day fund. Dip into it for covering a sudden expense like a medical bill.

The second emergency fund is big. It’s like a long-term savings fund. It should be able to cover 3-6 months worth of expenses. You can use it when you lose job suddenly.

7Create a list of dos and don’ts:

Make a list of dos and don’ts for your family. Stick the list on the wall or a refrigerator so that it acts as a constant reminder for all your family members.

Do’s Don’ts
  • Lower your fixed expenses
  • Transfer your balance to a credit card with 0% APR
  • Focus on paying off highest interest credit cards
  • Double check your bills
  • Get a free financial counseling
  • Review companies before enrolling in a debt relief program
  • Don’t borrow payday loans and get into debt
  • Don’t borrow a loan with a long tenure
  • Don’t have an expensive vacation
  • Don’t spend frivolously
  • Don’t forget to check your budgeting app daily
  • Don’t apply for multiple new credit cards

Conclusion

Every problem has a solution. I agree that it’s tough to manage family and life when you’re in debt. But this isn’t impossible. I’m sure if you use the aforementioned tips, you can strike a perfect balance between debt management, family, and life.

Take care!!

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