With the current global economic crisis, everyone is seeking for ways to cut debt and save cash.
The interest rates have become unbearable. Because of the high interest rates many people are hopelessly struggling with long term debts not knowing what to do to get out of the mess.
What most people do not realize is that one can easily clear all their debts and learn how to lead a life within their means.
Below are a few tips that will help you live a debt-free life:
1. Avoid Credit Cards
If you always find yourself struggling to pay your debts, then it would perhaps be high time you stopped using credit cards.
Among the primary factors in the present economic crisis is folks purchasing products and services on credit they can’t afford. The next thing they realize is being unable to do anything more than making small regular payments.
Minimum payments will keep you indebted as the interest will continue to accrue on your principal balance. For instance a thousand dollar balance on a standard credit card may take as long as 22 years to clear if one only makes minimum monthly payments!
Credit cards might be so tempting but do not be lured into using them. Instead, shun the trouble and expense by paying cash for the items you purchase. If you want a costly item, save money before you buy it. Only purchase when you can afford to pay for the commodity in full before you acquire it.
2. Purchase Luxury Commodities with Cash
Human wants are unlimited, everyone has extras and luxuries they need, but relying on credit to obtain them is imprudent.
You will get much satisfaction and pleasure from the luxuries you purchase when you pay for them in full as opposed to continuous monthly payments. Nothing takes the delight of a nice vacation or a new luxury more than the huge payments that strain your budget every month.
3. Create a Sensible Budget Which Includes Debt Settlement
The first step towards dealing with debts is making a reasonable budget. Rather than straining you, a good budget can liberate you from financial obligations! You will be able to account for all your expenditure and set a workable spending plan enabling you to continue purchasing only the most necessary items.
Your budget should take into account all aspects of your lifestyle including food, accommodation, household utilities, savings, entertainment, debt repayment and other utilities.
If it does not take into account debt repayment, there won’t be adequate cash to settle your debts. Take charge of your financial reality by working with a sensible budget every month. Before you know it, you will start seeing your debts shrinking while savings growing.
4. Consult a Financial Expert
You can seek the help of a skilled financial adviser or a financial planner to help you make sound decisions on how to manage your finances. Many individuals rely on these professionals to get out of debt.
A financial counselor can help you to manage your cash and plan ahead for your long term financial goals. These people are skilled in areas to do with debt settlement, tax payment, saving as well as investment and by implementing their advices you can achieve your long term financial goals and have a stable financial feature.
5. Bargain with Financial Institutions for Better Lending Rates
Always negotiate favorable rates with not only banks but credit card companies as well.
Many consumers assume they don’t have a choice but to resign themselves to the unfavorable lending rates set by these institutions however that is often not the case!
Consult the professionals at any of your local financial institutions and you will be surely amazed at how willing they would be to negotiate with you.
If you have a good credit reputation or have made steady, progressive strides to better it, you might be offered low interest rates on your borrowings.
You may also receive higher interest rates on your savings which will help you to clear your debts fully and move on with your finances in a positive direction.
You can sort out your debt problems and learn to avoid creating them in the future. These 5 steps will steer you towards the right direction and get you started on a new course to financial freedom and success.