Living with debts is the new normal. But if you can manage yourself to come out of the quicksand of debts, you will be able to stand above the rest. Such a financial stage of life is something which is dreamt by almost all the people around us.
It is a surprising fact that being out of debt depends a lot on the willpower and determination of the borrower. If the borrower has made up his mind to be out of debts and works consistently towards the goal, reaching this stage is not impossible. Disciplined financial habits and some sincere steps taken in this regard will help you a lot to be debt free in days to come.
One needs to follow some well-prepared strategies for paying down debts sooner than the prefixed time. Here in this article, we are focusing on 7 best steps to become free from debts.
Steps to Follow for a Debt Free Life
Organize your Debts
If you have more than one debt, prior to taking any step, you are to organize your credits. You can make a list of your credits along with the due date, the outstanding amount, interest rate etc. Most of the persons with a number of debts overwhelm with the payables and lost the track of credits. To avoid such situations, it is it advised to make a list or use spreadsheets to organize your credits to understand where you stand financially.
When you understand the fact that you are under a debt till your neck, it is high time to prioritize your loan repayments rather than anything else. You are to cut off expenses as far as possible so that some amount can be saved. Remember the fact that small saving made daily can help you to have a really good corpus after some time. One can take small steps such as taking public transport to work, eating homemade food, avoid partying etc which are really helpful in saving a quite good amount of money every month.
Develop a Strategy
There are two strategies to make faster repayments. First is to pay off the high interest rated loans then the low-cost loans. The second strategy says that if you have a large number of small debts, get them out of the all those loans before tackling the big debts. However, the first strategy of paying down the high-interest credits first will be helpful in saving more in interest charges.
Whatever strategy you may have opted, you are to stick to it till you attain freedom from your debts. When it comes to debt repayment, remember the mantra that Consistency is the Key. Being determined till your reach your goal is necessary. If you get diverted on the midway, all those efforts you had put at the beginning will give you no results. In this way, you will have to continue to live under debt for an uncertain time.
Build your Savings Corpus
When the ultimate goal of yours is to be debt free, you are to make your savings too. Your savings and loan repayment should go side by side. Savings is recommended with loan repayment as your savings will work as your emergency fund too. If you are equipped with an emergency fund, you will not need to take an instant loan if any cash crunch arises.
Stay Away from Further Loans
Availing a loan is very easy at the present day. Just a few clicks on your smartphone and the loan amount will be in your bank account. Such easy availability of loans has convinced many of us to apply for online loans even for purposes which are not worth taking loans. You are to keep yourself away from loans which are taken for entertainment. Such are the loans which generally turn to bad debts in the future. If you are opting loan for any urgency check EMI in personal loan EMI calculator then you decide depends on your repayment eligibility. So until and unless it is an urgency, loans are a big NO.
Use Extra Money Towards Credit Repayments
Whatever your source of income may be, within a year it is certain that you earn some extra money on the top of regular income. For salaried people, it can be a festive bonus while for the self-employed if may be a seasonal boost in business. Whenever there is such an extra amount of money, use it towards repaying the credits. One can make part payments of loans or paying more than regular for credit cards. Such an action of yours is certain to minimize the loan burden.
The Last Line
Whenever you make up your mind to become debt free, remember the fact that it would take a quite good duration of time. Your debts were not created in a day or two, getting rid of the same will also take time. considering the fact, one has to be determined and follow step by step loan repayment plan to make debt burden disappear from your back.