How far would you go to get out of debt? Would you give up something you find valuable? How much would you be willing to sacrifice?
There’s no question that more American families are finding it harder to make ends meet and save money at the same time. In fact, recent data shows that more than 40% of families could not cover a $400 emergency expense without borrowing or selling something.
You don’t have to look far to see why these statistics are true. Student debt hit a record high level in 2018. Auto debt among American consumers climbed by more than $9 billion according to the Federal Reserve. Credit card debt has reached a record high, surpassing the previous record of $1 trillion in 2017.
Consumers are feeling the pinch financially — with more debt and more stress about repaying their debt. In fact, a recent survey by Freedom Debt Relief found that consumer anxiety around debt is high enough that those surveyed would be willing to make some significant sacrifices to be debt free. Among the findings: 22% of respondents said they would give up eating out. 21% of those surveyed said they would sacrifice vacations for 10 years, and a surprising 13% would give up their right to vote!
A few of the things those surveyed were more reluctant to give up: Only 5% said they would be willing to give up the internet, and only 6% would sacrifice their phone.
It’s a worthwhile goal to eliminate debt — but unfortunately, while it’s realistic to cut back on expenses like vacations and entertainment in your quest to pay it off, there is no magic solution that would allow you to exchange your rights to the internet in exchange for debt free living.
So what’s the answer for the average family struggling with debt? There are a lot of options available, and no one-size fits all solution that’s right for everyone.
The best place to start digging out of debt is with a budget. Sure, an old fashioned budget isn’t glamorous, but you can’t know what you have to work with if you don’t have a clear handle on exactly what comes in and what goes out each month. There are a variety of different ways to budget, from a pen and paper, to a computer program, the envelope system and even a variety of smartphone apps. What matters is that you figure out what works for you and stick with it!
Once you’ve got a basic budget, you can start tackling an emergency fund. With an emergency fund, unexpected expenses like car repairs and medical bills won’t derail your financial outlook. Aim for a reasonable savings goal, and then once you meet it, keep building on that momentum until you have a cushion adequate enough to protect your family.
If your debt has accumulated to an unmanageable level, you may be searching for debt solutions beyond a household budget. Make sure you do your research to find the right solution for you and your family. It’s wise to do your homework and use caution. Agencies like the Federal Trade Commission can help you avoid scams and find a workable solution for your unique financial situation.
You don’t have to give up the things you find most valuable to get out of debt — there are solutions and options to help you reach your financial goals.
The CESI Team is committed to helping you find financial solutions. If debt keeps you from living the life you dream of, contact us for a free debt analysis today and get started on the road to a brighter future!