Financial Resource

Living a debt free life is a dream for most people. Who of us working individuals doesn’t wish that he or she doesn’t have any loans to pay off? I’m positively sure that it’s 100% of us. The thing that we should understand is that we have probably made our life a bit more difficult without even knowing it.

It’s probably our live now pay later approach to life that has brought us into the situation we are living through now. What we don’t realize is that debt curbs our lifestyle. They keep us from saving and developing wealth, and also from saving a good sum of money for our retirement age.  So here are 10 tips that you may apply in your everyday life, that will help you become debt free.

Tip #1

Your first enemy is yourself. If you don’t think positive and be convinced that you are going to reach your target, and live a debtless life, then you will not be able to make the difference.  What is it going to take to convince you to make up your mind and get rid of your debts? Do you need to be cornered by your creditors? You need to understand that no matter how much money you earn, what matters is how you spend it, and how much you manage to control it.

Tip #2

Your next step is to plan. If you budget and you put yourself a target, then you will have something to work for. Don’t think of a budget as a constraint that will not let you spend money and live comfortably. You should think of it as a way that will give you the freedom that you are seeking.  When setting a budget, you should be able to leave funds to cover food as well as something for entertainment. Don’t overdo it because you will end up not sticking to your plan.

Tip #3

Once you have set up your budget, start attacking your loans and debts one by one. The best thing is to study all the papers properly and see which of the loans are most expensive. The loan which has the higher rate of interest should be the one that is attacked first, such that you will save money on interest.

Tip #4

When attaching the loans, you may also use a technique that is called the snowball technique. Basically you should start by identifying which is the smallest loan and concentrate on killing that one. Don’t only pay the normal minimum monthly payment, but put every extra cent that you have in that loan, to pay it off as quickly as possible.  On your other debts however, you should only pay for the minimum amounts.  When this is paid off, you should then move to the next smallest loan, and attack in the same way.

Tip #5

Aim at not having more than one credit card, and don’t overdo it on the credit limit that is offered. When you go shopping do not take your credit card with you, instead pay cash for your purchases. You should realize that if you don’t afford to pay cash for your shopping, then you simply do not afford it! Credit card purchases only mean further debts.

Tip #6

If you already do have a number of credit cards which you would like to pay off, then you may either choose the option that we have discussed above i.e. the snowball technique, or else you may choose another option.  Debt settlement is a service that is nowadays offered by credit card companies, to help you get rid of your plastic balance. You will be able to negotiate to pay a fixed monthly sum of money on the balance, until you pay it off, and you will be able to do this with some savings. Yes the companies will be able to save you as much as 40% of your total balance. Definitely a thing to discuss.

Tip #7

If the ‘snowball technique’ is something that you would rather not go for, there is still another option that you might consider. Debt consolidation is another manner in which you can save lots of interest. This is a program that will tie in all your loans into one bigger, and cheaper loan. Therefore you will only have one monthly payment to fork out, and you will also be paying a cheaper rate of interest.

Tip #8

I wouldn’t really like to mention this as a tip to manage your debt, however if all else fails, you can still file for bankruptcy. This however is a very delicate subject, since bankruptcy has lots of negative connotations and complicated implications. I would therefore suggest that before venturing out on these dangerous grounds, you have a good talk with your lawyer.

Tip #9

If you simply can’t do the work on your own then still don’t despair. Seek help instead. There are plenty of counselors that are ready to help you with getting rid of your credit. Have a chat with one of these credit counselors, and ask them for tips and words of advice that will help you become debt-free.

Tip #10

Let us say that we have managed to become debt free! Hurray to a life of freedom! There are still however some tips that you should take in your stride. The aim is not only to become debt free, but also to remain as such over the years, and not falling into the trap once more. Once you pay your debts, don’t throw your budget to the wind, but amend it and make it work for you in your new financial situation. This is the time to save. Save so that when something comes up, you will have your own funds so spend, and you won’t have to ask for loans.

Conclusion

As we have seen, there are lots of tips that you could apply in your life, if you want to earn back your freedom and become debt-free. Do what works best for you, and apply these tips and even others, to improve your financial situation. Good luck!

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