Become Debt Free
Debt is both good and bad. The way you perceive it depends on how well you manage it. Debt can help you to acquire things that your income may not suffice to buy say a college education, a house or a car. The problem with debt is that you have to pay it back and it accrues interest, so you pay back a considerably higher amount than you borrowed. Essentially, unmanaged debt is like a noose that keeps on tightening until it has you in a stranglehold from which you simply can’t free your self. Debt elimination involves reducing your debt to zero. The following tips can help you to negotiate this process successfully.
Steps to Eliminate Debt
1. Formulate a strict budget - Impulse buying is one of the greatest enemies to financial freedom. Quite simply, the basis of debt elimination is to avoid spending more than you earn. Every purchase made should be part of a well formulated budget to avoid sinking further into debt. People usually spend more when using a credit card than hard cash. For this reason, it is advisable to minimize your usage of credit cards.
2. Develop a plan - It is important to have a debt management plan and endeavor to stick to it. The first step is to know how much debt you owe. Next you should take count of your revenues and expenses in order to determine how long it will take you to pay. Paying off your debt and staying debt free takes a lot of will power. Formulating the plan is the easy part but sticking to it takes a lot of sacrifice and discipline.
3. Prioritize high interest debts - Debts with higher interest rates grow faster than smaller debts. It is therefore advisable to prioritize the higher interest loan in order to reduce the principle owed. In the long run, this reduces the amount of interest you will have to pay, saving you some cash. Additionally, always pay on time and higher than the minimum requirement. This not only saves you some cash but also improves your credit rating.
4. Set up a cash cushion for emergencies - At any one time, you should ideally have three months worth of expenses set aside for emergencies such as job loss or divorce. A vacation to Hawaii is not an emergency. Ensure you only touch this money in case of an unplanned emergency. Spending your savings during emergencies is much better than taking a loan since you don’t have to pay any interest.
5. Negotiate with your creditors - In case you find yourself overwhelmed by credit card debt, it is wise to contact your creditors and inform them of your difficulties. You can request for lower interest rates or waiver of late charges or annual fees. Many credit card companies will offer you a reprieve for the simple reason that they wish to retain your business. Credit card companies appreciate the competitiveness of the market and know that their customers will switch to other issuers if their interest rates are too high. If you fail to communicate, your credit card company may assume that you are defaulting on purpose which may make matters worse.
6. Get a financial planner or adviser - Sometimes, expert help may open up paths that may not be obvious to you. However when hiring a financial adviser, it is prudent to be on the lookout for scams to avoid lining the pockets of some greedy freeloader with your hard earned cash. Debt elimination scams are very common so you should be on the lookout.
Debt Elimination is one of the best feelings someone can feel. Removing those chains holding you back helps bring back confidence, health, and changes your attitude. Spartan Credit is here to help you accomplish those goals, and with our proven debt elimination strategies, we are positive we can help you eliminate your debt. Contact us now by filling out the form below.
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