Rather go to bed without dinner than to rise in debt – Benjamin Franklin
Easier said than done you might say but putting in very simple words staying in debt too long is a result of poor money management. With education loans, easy credit cards combined with our lifestyle it takes a lot of work to become debt free.
To start with one should have a complete understanding of how much one owes. Access income and monthly expenditure then prepare a reasonable budget. When trying for debt relief one should use one credit card with a low limit and always try to pay more than the minimum payment. Small precautions will save you from spiraling down into further debt trap.
A low interest consolidation loan can pay off existing credit card balances. This will help you convert several debts with varying interest rates into one single and affordable monthly payment. A debt calculator should be used in the process, it’s a financial tool that help you figure out the time you need to pay off the debt, how much to pay monthly and how much to save.
For professional credit counseling one can enroll onto a debt management program with a credit counseling agency, here a professional helps you fix your budget so that you can make timely payments toward your debt. A unique debt relief approach is debt settlement wherein the creditor reduces the total debt amount in exchange for a lump sum payment. This usually happens in case of unsecure debts like utility bills etc.
To get a more comprehensive look at your debt and expenses there are a number of online budgeting tools provided by financial websites. They make your financial data easy by presenting it in the form of graphs and charts. A small suggestion that helps is that try paying cash whenever possible, avoiding credit cards is equivalent to avoiding debt. Debt avalanche and debt snowball are two other methods of tackling debt. While the former involves paying off the biggest debt first, followed by the next big number and so on the latter involves repaying the smallest debt with extra payment and minimum payments to others. Choose whatever suits you and stick to it.
Tackling debt is not an easy task; sacrifices will be made in the process. Some things that can save a lot of money are fairly easy to do like going for unbranded clothes, skipping dinner at expensive restaurants, renting a movie to watch at home. Always have an emergency fund to stay prepared for any kind of unfortunate incident, keep aside certain amount for emergencies and never touch it to make credit card or monthly mortgage payments. Keep a track of all your debt, get your credit reports from credit bureaus like Equifax, Experian and TransUnion.
With a few necessary steps it is not impossible to live a debt free life. Complete awareness of your finances and control of your expenses will definitely free you of that overwhelming debt burden.