Are You In A Debt Trap?debt trap

What’s A Debt Trap?

It’s simple, a debt trap is out of control debt or debt overload. You may be suffocating in a debt trap and not even know it. Or you may be completely aware of your debt troubles but not know how to eliminate them. Let’s talk about how you can free yourself from any debt trap you may find yourself in.

When Debt Becomes Financial Baggage

Nowadays there are just certain types of debt that are unavoidable. For example, without mortgages or student loans most of us would not be able to afford a house or get a college education. So a mortgage or student loan is considered by some to be good debt.

The bad debt and the one that strangles you is credit card debt. Of course credit cards are not bad if you pay off your balance on a monthly basis thereby avoiding the interest and fees. But credit cards work against you whenever you carry a balance. The credit card companies win but you lose whenever you carry balances. You lose because the end result of adding on the interest and fees is that you end up paying more for everything you buy with a credit card. Your creditors win because they make lots of money on the interest and fees they charge you.

Credit card balances create a debt trap because they create a never-ending loop. If you are in that debt loop you get it, debt can be very stressful. It almost seems impossible to break free from credit cards once they get a choke hold over you. Since debt shifts ownership from you to the creditor, your creditors own you until you pay them. This is why credit cards can become financially suffocating. Of course you could walk away from your debt by declaring bankruptcy; but that is never a good choice since it creates other long-term problems. So avoid bankruptcy whenever you possibly can.

Debt Trap 101

Since credit card debt is so bad then why do so many people get trapped by debt so easily and stay in it so long? Good question. The answer is that racking up credit card debt is easy. But debt is easier to get into then it is to get out of. Isn’t it easy to buy what you want and ignore the fact that you may not be able to afford it? You buy today and pay sometime in the future. We’ve all been guilty of buying stuff that was not on our shopping list. That can be resolved by promising yourself to never go shopping without a shopping list. Regardless of how petty it may seem you will use that list and not detour from it; if it’s not on the list, it does not get purchased, period.

Another good way to help yourself stay out of credit card debt is to set spending limits for yourself. Give yourself an allowance so to speak. You will allot yourself only so much every month for clothing, entertainment, food, coffee, vacations. And once you reach that spending limit, that’s it, you are done spending on that item for the month. Easier said than done? Try it out, you may surprise yourself.

Need Vs Want Spendingdebt trap

If you want to really avoid a potential debt trap only buy what you need instead of what you want. Need spending and want spending are so different. You get into so much trouble when you buy on wants vs needs. Especially when your needs do not match up with what you can actually afford. Yes you need a purse but do you need the $300 one or just want the $300 one? Will a $30 purse suffice? Yes you do need a break after a long work day so you want to eat out for dinner every night because it is easier than cooking, but it’s also more expensive. Yes you need your morning coffee jolt, but when you are running late you want it on the go because that is faster than making it at home, but it is also more costly. See how easy to justify need spending? It is not hard to see why need spending can easily lead to credit card debt. Try changing your spending habits from wants to needs, you may get hooked.

Set Yourself Free From Any Debt Trap You May Be In

If you are trapped by debt and want to break free from it, it’s all up to you. You need to have a strong desire to change your entire financial lifestyle. Without that desire to change you could be trapped by debt forever. Do you like watching your money go down the drain due to the high costs that come with debt? Probably not. So make a commitment to yourself to work on your debt.

To dig out of the debt trap that is currently strangling you, go easy on yourself  take it slow, change is a slow process. Take the time to establish a good set of financial habits. Pay down your debt by paying something on it each month. Make your very best effort to avoid adding to your debt pile by focusing on ways to save money instead of justifying your spending sprees. Try living on a budget. Live within your means; spend less than your paycheck. Above all avoid purchases that cannot be paid for with cash. These to-do’s are all great in theory, but will only help you if you implement them. You do not have to go cold-turkey, again, change is a process, take one step at a time.

You will see that the benefits of living debt-free far outweigh the strangling effect of a debt trap. Take back your financial life, take control, you are in charge. Change your financial habits. Remember that carrying a balance on your credit cards is just a bad habit that can be broken. Overspending to the point of debt overload is also a bad financial habit that can be reversed. It is all up to you.