A debt free is life not unattainable. It may seem an impossible and frightening task but it is possible. It requires patience and discipline determination and time. Given below is a run down of 6 steps that will help you in the journey towards a life that is free of financial stress.
Step 1 - Admit that you are facing problems in managing your finances.The first step towards debt free life is to come to terms with the fact that your debts have become unmanageable. Leaving bills unpaid and ignoring the problem does nothing to wipe off your existing debts. It only makes the situation worse. However the fact that you’re reading this article means you have accepted that you are in debt and you are ready to take the next step.
Step 2 - Take an honest look at your present financial situation. Make a list of your debts. Next to the listed debts include the name of the creditor,the total amount
you owe, the rate of interest you are being charged and the monthly payment you make towards this debt, if any. It will not only give you a clear picture of your financial standing but will also help you in choosing an appropriate debt solution.
Step 3 – Prioritize! Decide which bills to pay first and which ones can wait. Concentrate on paying off the debts that have a higher interest rate. You will save more money in the long run by ridding yourself of these expensive loans first while keeping up the required repayments on the others.When making the repayment remember to pay a little more than the minimum as minimum debt repayments only covers the added interest. It makes no impact on the capital amount.
Step 4 - Create a realistic monthly budget for your outgoings. List all the essential expenses and non essential expenditures. The non essential expenditures can be completely cut or lowered substantially until you become debt-free. Evaluate your monthly balance by subtracting monthly expenses from your monthly income. This will tell you how much money you have at the end of the month so that you can start paying off your debts. Do not forget to keep some money aside for unexpected expenses. As your debt goes down, you will see a fall in your interest charges.
Step 5 - Refuse to take on any kind of new debt. As you already in are in debt, adding on a new debt will increase your debt and will hinder your progress towards being debt free. You must decide once and for all that you will not add any new debt and stick to it!
Step 6 - If you are not able to manage your debts on your own then you can opt for professional credit counseling. You will be guided by financial experts who will help you in taking a step nearer to a debt free life. There are options you can take such as taking out and IVA or even opting for Bancrupcy. Recently there are companies who offer to write off your credit cards legally.
