Why Frugality Might Not Be Enough to Beat Debt

Saving more money by cutting expenses is often cited as a way to get out of debt. While it’s undoubtedly true spending less isn’t going to harm your efforts, there’s no guarantee it’ll do the trick. These are some reasons why frugality might not be enough to beat debt.

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Frugality Can Be Undone By One Decision

It’s great to take a frugal approach to life. Simplifying things can lead to you finding a higher value on things that don’t cost money. But it’s important to see the potential pratfalls in frugality. This lifestyle is only going to be effective if you can find a way to make it sustainable.

Think about someone going on a diet. These are almost always unsuccessful because they’re undertaken with the near term in mind. Even if you’re able to lose weight, you’ll gain it right back if you burn out and revert to old habits. Also if you’re frugal 95 percent of the time, one big lapse in judgment can undo all that saving—sending you right back into the jaws of debt.

You Might Not Be As Frugal As You Think

Do you consider yourself to be frugal but still find yourself running out of money each month? Unless you’re living on little money, or have high debt or other financial obligations, this shouldn’t be the case. To be truly frugal means, you’re cutting out unnecessary expenses wherever possible. But doing this requires you to be consistent and keep track of your spending.

Building a budget is necessary if you want to fulfill frugality goals. You need to track income and expenses while also finding ways to reduce costs. Eating out and drinking is two areas where people tend to blow it.

You also need to consider whether an option is actually the most cost-effective for you. Do you need to get the more expensive vehicle if another one will work just fine and cost less? People trying to use frugality as a means of getting out of debt need to ask these tough questions. Otherwise, it’s going to potentially negate the process altogether.

Debt Doesn’t Play Fair

The nature of debt can sometimes mean that purely being frugal won’t be enough to beat it. How is this possible? Because debt doesn’t play nice. Even if you cut out all extra expenses, you might still not be able to get out of debt due to interest payments. This is particularly true with aggressive forms of debt, like high-APR credit cards or payday loans.

High-interest rates mean your balances are going to stay active longer since they continue growing as you’re working to pay them off. Don’t despair if you’re feeling inundated by debt. While it can feel hopeless when you’re in this situation, there are ways out. Start by seeking credit counseling services.

Talking to a debt expert can give you a better idea as to how someone in your situation can overcome debt, even if you’re struggling while being frugal. It’s possible using some form of debt relief service, like settlement through a program like Freedom Debt Relief, will be your best bet. Just make sure you choose a reliable partner with lots of positive online reviews.

You Can’t Control All Circumstances

Even if you ace frugality and are making progress paying down your debt, this still might not be enough to eliminate your loans. Unforeseen circumstances can totally derail your financial situation.

This is clearly illustrated when you look at bankruptcy statistics. Over 60 percent of all personal bankruptcies are brought on by medical bills. You can’t help it if you or a family member needs expensive medical care. And those numbers aren’t due to a lack of health care coverage. Almost 80 percent of those individuals had some form of insurance.

The lesson to learn here is that simply saving isn’t always going to be enough to alleviate your debt. While it’s certainly helpful, it’s more effective when combined with other things like boosting income and financial planning.

If you are interested in even more lifestyle-related articles and information from us here at Bit Rebels then we have a lot to choose from.

IMAGE: PEXELS