Reasons People Procrastinate Paying Down Debt

[jeffrey]

By Wixx

It sounds very cliché to say, but now <i>is</i> the time for all good debtors to begin reducing that debt. Of course I suppose that a "good debtor" has not allowed the debt to take over and is well in control. The point I am making here is that when we are talking about anything involving interest, like credit card debt and loans, time is very important. Every day the debt grows. Even if you are making your payments, it is fighting back against you.

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Every time the interest is posted, you have either taken a step to reduce your debt, or you have missed an opportunity to do so. Putting off your debt reduction costs you money in the form of higher interest charges every month. You have done research, you checked the debt reduction calculators, and you have even come up with a plan in your mind, but if you have not started yet, you have wasted your time. I have heard many excuses from people who are waiting for a better time to start reducing their debt.

There are a lot of people who think their bills are under control and although a little help could pay them off faster, they are not in a financial crisis, so they do not need to hurry. Others have a goal in mind, but the debt calculators say that to achieve this goal they need to use 10% of their monthly income for debt reduction, and they can not spare that 10% so they are waiting until they can. Still more are waiting for some sort of windfall to take down a big portion of their debt, so that they have a smaller hole to dig themselves out of. Then there are the people, like me, who want to start now, but something always comes up.

The something that comes up can range from major necessary expenses such as needing a new refrigerator or furnace, to trivial things such as that new video card that, although it will be obsolete in 6 months or a year, you just have to spend the $150 to obtain. I am being generous here, because most people in this category want to have the really good card so they can say they have one of the best until its own need to be replaced arrives. These will cost $300-$500 easily and some may even require new secondary cards to achieve their full potential. I am not saying that you should wait until you are debt free to upgrade your computer equipment, but instead of shelling out every cent that you have to do so <i>now</i>, you could put aside $100 this month and use the rest to pay down your highest interest credit card. In a few months, you have enough for that upgrade, <i>and</i> you have made an impact on your debt.

Those waiting for a windfall may have a little extra money each month, but their debt is either too large for them to see this money as able to make a difference, or small enough that said windfall will pay it off so why not wait. Perhaps they are waiting for their tax return and see no need for debt reduction for two months or so while they wait. Maybe they are expecting a bonus check or a raise at work, or a gift is on its way. Paying what they can at this time may actually result in tens or hundreds of dollars saved in interest, but they would prefer to wait. The other important thing for this type of debt reducer to think about is that if they adjust their monthly spending a little to generate a small amount to pay down their debt while they wait for their ship to come in, so to speak, they can send this money to some sort of savings account or retirement fund once the debt is no longer looming overhead.

People who feel that they cannot free up the amount that the calculators or economists recommend, need to look at the big picture. Sure, most say that you should use 10% of your income to tackle the debt that you allowed to get the best of you, but you can start with whatever amount that you <i>can</i> spare.

Every $100 that you can afford to send on top of the minimum payment on a credit card with 12% interest is roughly $1 saved on every month's interest charges for the remainder of the time you pay on said card. This may not sound like much, but if you are due to pay on a large credit card for several years, those $1 savings each month add up fast.

The second month you are actually sending an extra $101 if you consider the decrease in interest. This makes the interest savings $1.01 this time, because you are not paying interest on that $1 you saved last month. So in two months you have knocked $202.01 from the principal and saved $2.01 on the third month's interest charges. Once you get this bill paid off, you can add the minimum deposit from it to your $100 and work even harder on the next bill that you target for elimination.

If you think you are in control of your debt and therefore are not interested in paying it off sooner than the minimum payments will accommodate, are you aware how much interest you pay each month? Take a look at all of your monthly bills. Add up the interest paid on all credit cards, car loans, student loans, and any other loans that you may have. The total amount of interest that you are being charged is effectively a monthly fine that you are paying for allowing yourself to live with debt. I don't know about you, but I try hard to avoid paying any fines as I have enough things that I want to spend my money on, or save it for. Reducing or eliminating even manageable debt is the smart choice.

Courtesy of <a href="http://www.debtreduction101.com">Debt Reduction 101</a>

[socai]

Stop Procrastinating! Consider These Steps!

Ways to deal with procrastination
Most of us can actually admit the fact that they are procrastinator. Actually, I myself can say I am that way and most of the times I wonder what is the right way to go. You see, even if I have a steady job and so on I still enjoy working as I used to back in high school meaning that I still like to complete project right before they are due. In some cases I got to the point where I kept asking myself what would cost me to work a bit more in time, rather than making everything in a rush at the end? Well, I got no answer to that whatsoever during my high school or college years but nowadays procrastination does have several side-effects unfortunately. Those were present even in the old days, but they were too minor to upset me. Nowadays it makes me stressed because I know I should start early to work on certain aspects of my work, but instead of it, I am rushing in the last days or hours to do what I have to do. Unfortunately, there were many situations in which I felt like procrastination is the only thing that actually keeps me away from being an entrepreneur – and I was not even by far wrong.
Useless justifications
As a small example, I thought most of the times that family came first, and I still think like that, but that does not mean everything has to come before your work. I kept telling myself that spending a little with my family every day is more important, and so I started making up even more excuses that were only taking me away from what I had to do. Then holidays came, and there were more reasons for which I should not work, and so-called stay with my family. When I realized how back I got on my project, I panicked and said that I will work all New Year’s Day, but of course, that did not happen because I found any other excuse. I was very content with my gifts, a new laptop that I started setting up and the whole list. Of course, I lost all day without actually doing anything at all, and I kept saying to myself that there is always tomorrow, and today I need this rest. Yet, I started recently to realize where were the problems, and I made out some kind of a plan to deal with my procrastination issue. Below I have written my formula, and I really hope it will help you too.

1. Problems and barriers – think about them! – You see, whenever you have a problem, and you realize you do not want to work on a certain aspect of your chore, go ahead and ask yourself what is your exact problem with that thing. If there are problems you do not want to deal with then that is a good enough reason to start dealing with them right away because otherwise they will always hunt you.
2. Have your own action plan – Do you plan anything in regards to your due date? If not, you should, of course, it is easy not to actually stick to it, but think about determination, and look at what I said at step one. For me, planning helped a lot because it is a motivational factor.
3. Face your fears – Remember to always deal with everything that bothers you because you will never get over this otherwise.

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[poundwise]

I think that the primary reason people don't pay down debt is because they either don't see the need to or don't think its reasonable. They have come to believe that you will always have debt and that's just the way it is.

This is especially true when it comes to things like car payments. People are now much more accustomed to 'buying' a car by seeking a loan and are usually much more concerned with the payment amount than with the price itself. Since they often believe that they'll always have a car payment, they have no sense of urgency to pay off their vehicle(s). Many of them will trade in their vehicle(s) on a new one before they ever get it paid for anyway. Thus reinforcing their negative conclusion and bringing about the fact that they indeed, if they continue in that mindset, will likely always have a car payment(s).

A second factor is that many people like to live in the now. They don't like the idea of holding something from themselves to accomplish a goal later. They'd rather spend the money now on something they want rather than save it or send in extra payments to reduce debt. This is another sure-fire way to ensure that you stay in debt for a long time to come.

[EconoMutt]

Some of the reasons that people may be delaying paying debt is because of a fear of losing their job or they may not be worried because the interest rates are low.
I'm not paying my debt off very fast because I'm trying to save an EF.
My interest rate is also at 3.25%