8 Tips Of Getting Out of Debt

by Kelvin Redfield on April 29, 2012

Is your current financial in a mess? If the answer is yes, then it is the right time for you to take control of it. Reckless spending can easily lead to large debt. When someone is in a debt, it is quite hard for them to smile or enjoy their lives. They will be constantly worrying about the incoming bills. Running away or ignoring this problem is not a good solution. You need to solve it as soon as possible before your debt become bigger. In this article, you will learn 8 basics yet useful tips to overcome your financial crisis.

1) Work it Out

You need to analyze and understand your current situation. Sit down, and write out exactly how much do you owe and who do you own to it. If your debt repayments take more than 30 per cent of your net monthly income, you are pretty much in the danger zone. You need to cut down your unnecessary expenses in this case.

2) Know Your Budget

Once you figure out the total amount of money that you need to pay back, you can draw up a budget. Of course, you need to be realistic on what you can afford to repay, and at the same time, it stays within your net income.

3) Be Disciplined

Increasing your debt is also out of the question. If you are thinking of borrowing money from someone lese, please refrain from doing it. Your main goal is to repay what you already owe, and it should be done as soon as possible.

4) Control Your Daily Spending

First of all, keep all of your money into the bank and only take out a set amount of money (for daily spending) from the bank. To prevent yourself from taking more money out from bank before the end of each week, let your parents or relatives keep your card. In this way, you cannot spend more than you have in cash.

5) Seeking A New Plan

You can easily save up to hundreds of dollars each year on your phone bills by switching to other providers or a new service plan. As for your household bills such as electricity and water bills, you need to reduce the usage too. For example, you can switch off the lamp or light in the living room when you are going to bed. No point letting the light running up till the next morning.

6) Switch To A Cheaper Credit Card

Not every credit card offers the same interest rates and benefits. You can go to different financial institution and look at their policies and offers. In this way, you can easily save hundreds of dollars by switching to a credit card that offer a better interest rate than you are paying now. Do not underestimate the difference between 5% interest rate and 4% interest rate. These numbers do make a different to your debt repayment in the long run.

7) Store Cards

Among all credit services that you know, the store cards have the highest charge rates. It is quite difficult for one to manage these debts once it became a vast amount. In this case, throwing the store card is the best option in order to avoid further temptation to use it. It is much better if you are paying cash for your purchases than using your credit/store card. Shopping around to look for the best deals is advisable.

8) Your Bank Account

With the rise of Internet banking, there are so many choices and advantages you can choose from it. Switching or taking advantage of the offers such as fee-free banking or lower overdraft rate or better interest rate for saving account can easily save you a lot of money. All of these can be easily done by switching to a new account.

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