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The Expressway to Freedom from Debt!
Debt management is the route to debt freedom. It is a fact of life that
the longer we are in debt, the more interest we pay. For example, if we
have taken a 20-year term housing loan, the total amount of interest we
will pay over that long period may eat away our financial resources a
great deal. It will also be money that could have been put into better
use. It therefore makes good sense to clear your most expensive debts
first and do it fast.
Quick-fix solutions are always in demand. Don't we just love to have ready-made answers for all our predicaments? Usually a lot of the issues we face are self-created. Being steeped in debts is one of them.
It is common knowledge and experience that tells us that people who have
several debts have got there largely due to mismanagement of funds. It
is when we do not properly or effectively (and sometimes even foolishly)
use money at our disposal that we find we are left with little or none
at all. Isn't what someone said about respecting money and it will respect
you ring true?
So then considering the situation, as it is, namely, that you are in debt
and need to get out of it let's see what we can do to help.
First and foremost you need to put down all your income and expenditure
on paper. See it for what it is - clearly and without any frills. Numbers
do talk and at a glance you can know what comes in and what goes out.
Make a separate column and total the outstanding due to your name. Separate
the standard outgoing from the others e.g. monthly utility bills are a
regular feature but a purchase of a suit for Christmas is not.
You can then see how much is necessary from luxury spending. Your food,
clothing and shelter and associated monthly costs are basic.
Once you've sieved through, you will know your wants from needs. This
is vital information. Often what we think we need is actually a want -
something you can well live without, especially if you want to get out
of the red!
Now for the next step. Calculate how much of minimum balance you pay for
each of your debts. Once you get that figure, and you hopefully have something
left as balance, add that to one of the payments that you will be making.
Choose the debt that has a highest rate of interest. In that way you can
steadily clear the costly debts first.
Of course, the above holds true only if you have some amount left after
calculations. What do you do if you don't?
There is a way out here as well. Debt consolidation loan! Take this loan
and pay off all the others. You have to only ensure that you can maintain
the monthly installments without fail. Check around to see who offers
the lowest rate of interest.
There are other important things you can do besides the above to clear
your debts fast, some of which is to employ drastic measures.
How does cutting your credit cards sound to you? In fact the fastest way
to get out of debt is to ensure that you don't get into new ones. Imagine
if you were ill and down with a sore throat. You take necessary precautions
by avoiding cold beverages, effectively use salt-water therapy and even
take some medication for the condition. However you go for a trek the
same day and sprain your foot and as a result while your throat gets better,
your foot now causes problems. Cutting up your credit cards will drastically
reduce and eliminate future debts.
Make your minimum monthly payments on time. This will ensure that you
do not get any late payment fines or penalties.
Transfer your outstanding debt to a credit card that has a lower rate
of interest. In this way you can pay more and clear the debt faster.
If you want to get ahead of the line in paying your debts faster employ
a Two-pronged approach - don't accrue new debts and steadily clear costly
and old ones first.
Other information on debt.
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