One of the factors that make a life in debt very difficult is the fact that you need to squeeze in your credit payments on top of your usual expenses. In most cases, the additional amount is not enough to cover both. When faced with this scenario, you need to choose between your debt and your expenses.

The obvious answer is to prioritize your expenses. However, that does not mean you will not make changes towards it. What you need to do is to trim your expenses down to the bare necessities. This means you identify the wants from the needs. The needs include the costs that you need to spend to survive. That includes utilities, food, groceries, home, clothing and gas. Regardless of how you lived your life prior to your debt crisis, you need to strip down to the essentials. You need to be honest about what can be categorized as your needs. For instance, a home is a necessity but living in a 5 bedroom apartment when you can fit in a 3 bedroom home is not a need. You have to make the necessary changes so you can afford all the payments.

Your wants include mostly your entertainment expenses and any unnecessary subscriptions that you can live without. These can be gym or club memberships. It can be that yacht that costs a lot to maintain. It can also be that vacation home that you don’t have to own.

Despite the obvious priority of your bills, your priority will be your needs and not your wants. You need to look at your debts first before you can consider the amount that you will allot for your entertainment expenses.

But even as you prioritize your debts over your wants, you need to rank them according to priority. For instance, secured debts will have to be put on top because defaulting on payments could lead to the loss of the collateral that you put on the line to get that particular loan. It can be your home or your car. Other debts also include student loans and tax debts. You can place at the bottom of the debt list all your unsecured payments.

If your income is sufficient to cover only your needs and debt, then you may have to do without your wants first. That means buying new clothes will have to wait until the more important occasions. Or that can mean giving up your home and moving to a smaller one.

If there is extra, it is highly advised that you put that on your savings instead. Under the circumstances, you may want to build your reserves first to make sure that you are prepared for any emergency that can stall your income.

If all else fails, you can opt for a debt relief program that will help reduce your monthly payments. Or, you can simply increase your income. There are many online jobs that you can explore. You can even capitalize on a hobby of yours so you can earn money from it. All of these extra income can go to any deficit that you have on both your bills and debt payments.

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