A while ago, I accumulated debt without realizing what it was doing to my financial position. I used to use that plastic card as a hobby. Getting trapped in the debt deeper and deeper, I got exhausted of my terrible situation and wanted to get back together in any way I could. I was successful and having a firsthand experience, I would like to offer you some debt elimination tips.
Do’s and Don’ts to reduce debt
Here are a few debt elimination tips that can help you a lot.
DO: review your credit score regularly.
You should review your credit score on a very regular basis if you want to handle your debt in the right way. See how your credit situation represents you to your creditors. Mostly, FICO or Equifax credit score with report products are preferred by lenders.
DON’T: mess up your credit.
Never forget to pay bills in time. Such act affects your credit if you apply for other loans. Make sure you are responsible in managing your payments.
DO: negotiate for lower interest rates.
Most common debt elimination tips involve managing to lower interest rates. Even before you go to purchase a new credit card, negotiate for lower interest rates. You can consider applying for balance transfer credit cards and zero percent APR credit cards.
DON’T: increase your debt load.
When you are already going through financial crises, don’t apply for more loans. They don’t help you. However, if you are considering debt consolidation, loans are advised.
DO: make a practical budget
Planning ahead and making budgets makes your life easier. You just need to be organized and updated. ‘Budgeting tools’ can help you through this stage. You can also use YNAB which is money management software. Stay in your budget and you will never require debt elimination tips.
DON’T: follow your previous spending patterns.
If you want to blame someone, blame your spending behavior that got you in debt. If you are really serious about reducing your debt, you need to make sure you are not making unnecessary purchases. Making coffee at home instead of buying from Starbucks is what you need to do. Change your priorities and avoid luxuries till you clear your debt. Choose less expensive things or even free, if you find them.
DO: keep a fund for emergency.
Having an emergency fund can help you even if it’s just $500. Try to have six month’s expenses in saving so that you don’t get into debt immediately if something unexpected occurs. BUT, keep it only for real emergencies. Don’t try to justify purchasing a sweater from 80% sale as an emergency. If you do so, the only person you are betraying is you. Emergency funds should be sued for a car breakdown, an unexpected illness etc which require more money than you have and you might not even need debt elimination tips.
DON’T: Look for shortcuts
There are no easier ways in such situations. Bankruptcy seems an extreme decision and it should be avoided unless there is no hope. I would also advise you not to spend money on lotteries or gambling. Such things cause more harm than good. You have to put some real effort to get out of your debt.
DO: plan and strategize
Well, I badly screwed up in my case and made my payments according to the harassing calls for each purchase. In other words, this means that I paid much more than i purchased for and for a very long time. Among the debt elimination tips, the most suitable strategy I could understand later was to pay minimum amount every time on all accounts and then pay as much as I can in the account that had the highest interest rate. Take any extra income and savings every month to make your payments starting from the maximum interest rate debts. This strategy can make sure that you have to pay the minimum amount of interest possible.
I really hope that all of you can gain knowledge from my biggest mistake. Delaying your debts can never do you good. They will increase your stress along with your credit.
Already delayed it? Ouch! Follow these debt elimination tips.
You should no longer wait. Pay off your accounts as soon as you can. The earlier you can clear your debts, the earlier you will come back to your life. Don’t take it easy tough, it requires effort.
DO: try to raise your income and lower your expenses.
This is the best thing you can do for debt elimination. Try looking for a part time job or a better full time job. If you are unable to increase your monthly income, you have no choice but to cut down your expenses. Buy lesser clothes for a while, don’t dine out in five star hotels, postpone you trips, choose less costly items in almost everything and pay for your debts. Best of luck!