Mastering Money Matters: How to Get Out of Debt for Good
Money is one of the most significant aspects of our lives that we pay close attention to. We wake up every morning to work hard, to earn adequate money for our daily and long-term needs. We value money because it helps us live a comfortable life, pay our bills, save for the future, and support our families.
However, despite the value we place on money, many people still find themselves struggling with debt. According to a recent report by the Federal Reserve, U.S. household debt reached a record-high of $14.6 trillion in the first quarter of 2021, driven by mortgage debt and a boom in auto loans.
Debt can cause significant stress, negatively impact one’s credit score, and limit financial opportunities. But getting out of debt is possible. In this blog post, we will discuss how people working in skilled trades can master money matters and get out of debt for good.
The Importance of Creating a Budget
Creating a budget is the first step in managing your finances and getting out of debt. A budget is a financial plan that outlines your income, expenses, and savings. It helps you make informed financial decisions, curb your spending, and prioritize your debts.
According to a study by the National Foundation for Credit Counseling, 68% of American adults do not have a budget. That means that they are likely to spend more than they earn, leading to debt accumulation.
As a skilled trade worker, you should pay close attention to creating a budget that reflects your income and expenses. In your budget, consider your fixed expenses such as rent, car payments, and insurance, as well as your variable expenses like food, entertainment, and clothing. Aim to cut down on unnecessary expenses and allocate more funds to paying off debts.
The Importance of Tracking Your Spending
Tracking your spending is another essential step in mastering money matters and getting out of debt. Tracking your expenses is the process of monitoring your daily expenditures, including cash, debit and credit card transactions, subscriptions, and other financial transactions.
Without tracking your expenses, it becomes almost impossible to account for every cent you spend. You may find yourself making impulse purchases or spending on unnecessary items that could be allocated to debt payments.
Tracking your spending allows you to see where your money is going, and how you can make adjustments. It also makes it easier to adjust your budget accordingly as you see where your money is being spent.
The Importance of Paying Off Debts
Paying off debts is a crucial step in getting out of debt. Debt can weigh you down financially, mentally and emotionally. High-interest rates on credit cards, mortgages, car loans, and other debts continue to accumulate, leaving you with a never-ending cycle of debt repayment.
According to a report published in 2021 by the Consumer Financial Protection Bureau, more than half of U.S. homeowners are currently paying off a first mortgage, with a median balance of about $200,000.
Skilled trade workers can create a debt payment plan to help prioritize and pay off debts. Consider using the debt snowball or avalanche method, where you focus on paying off debts with the highest interest rates first or paying off the account with the smallest balance first, respectively. Both methods can help reduce your overall debt as you pay off each account month by month.
The Bottom Line
As a skilled trade worker, getting out of debt requires a significant amount of effort, planning, and consistency. By creating a budget, tracking your spending, and prioritizing debt payments, you can master money matters, and become debt-free for good.
In conclusion, debt can negatively impact skilled trade workers, but getting out of debt is possible. It requires a combination of budgeting, tracking expenses, and prioritizing debt payments. By making sound financial decisions, skilled trades workers can achieve financial freedom and stability.
> For one on one or group assistance with personal finance, STR recommends that you check out the following resources:
> Inaccuracies with Bureau of Labor Statistics (BLS) data: Many of our blog posts will quote BLS data. SkilledTradeRescue.com has been able to identify that data quoted specifically for Skilled Trades can be as much as 50% LOW in many USA labor markets. For more information on these inaccuracies please visit the STR national labor survey page at the link below. On this page there is a video containing the latest information at the top of the page as well as other information. If you currently work in skilled trades, PLEASE consider participating in our national labor survey.