Avoid hitting your debt ceiling

The federal government’s budget woes have brought the topics of financial planning and managing debt to the forefront of the national conversation. The situation has left many people feeling frustrated and helpless, however, the anger we’re lobbing at Washington may be a bit misdirected.

The situation the government is facing regarding the national debt is a scenario that millions of Americans are living on a daily basis. But unlike the government, most people don’t have the option to increase their personal debt ceiling.

There are a number of key financial lessons that you can utilize to help you avoid hitting your personal debt ceiling.

  • Don’t avoid the problem. You can put a bandage on a wound, but if you need surgery it’s ultimately unavoidable. In fact, a “quick fix” will ultimately cost you more in the long-term. If you’re having difficulty paying your bills each month, opening up a new line of credit may be a temporary solution, but it doesn’t address the real issue.
  • Be honest with yourself. What caused you to become overwhelmed with debt? Was it medical bills? Did you lose your job? Or maybe you are living a lifestyle you simply can’t afford. Sit down with your bills, receipts and checkbook and take a long, honest look at where your money is going. You have to pinpoint the problem in order to determine the best solution. Take this quiz to determine whether you have a healthy relationship with money.
  • Make tough decisions. You cannot spend more than you make. It’s that simple, and it’s that hard. Creating a budget is a necessity. Your budget should be based on your income and your expenses. Use this expense worksheet to help you get started. If you are still having a difficult time creating a budget, MMI offers free budget and debt counseling. The certified counselors at MMI can help you understand your situation and provide you with advice tailored to your personal situations.
  • Prepare to be uncomfortable. Through the budgeting process, you will likely find that you have to make spending cuts and sacrifices. Although it will feel frustrating and overwhelming, it’s important to keep in mind that those feelings are all part of the journey. Getting out of debt is not a fun process, but remaining in debt is much worse.
  • Don’t look back. You will face barriers and setbacks in your journey, but keep moving forward. If you begin to feel discouraged, review the accomplishments you have already achieved. Consistently review your goals and make sure they are realistic. This is your plan, so modify and tailor your goals in a way that will keep you motivated. Most importantly, remain focused on the end result.

The next time you are tempted to look critically at Washington, turn that critical eye on yourself and make a change that you can feel good about.

Jessica Horton is a former copywriter and community manager at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.