New year is just around the corner and many a people around the globe are getting ready to usher in the New Year with resolutions such as weight loss, quit smoking and debt clearance. A debt free future is everyone's dream. If you can clear off at least 75% of your debts then your financial future is almost secured. Once the debts on credit cards and the loans are partially cleared, you would have more than enough money to save and also invest in your retirement plans. Make getting out of debt problems one of your New Year's resolutions.
Ways to Get Out of Debt Problems
This New Year take steps to improve your financial health. There are a few strategies that you can adopt, to overcome liability. There are many debt management techniques such as debt assistance and debt counseling. This article is dedicated to people who want to free themselves of debt.
Spending Habits
Once you decide to resolve your debts to lead a financially secure life, you will have to curb your urge to spend. Most of us have become accustomed to purchasing goods and services using credit cards. We are conditioned to the formula of "buy now" and "pay later"; this is one of the reasons many of us are in debt. Cut down on eating outside and spending on unnecessary goods to begin with. You can start by making a monthly budget and making efforts to stick to it. Writing down your daily expense in a diary is also a good option. Review your expenses at the end of the week to understand where you have spent more.
Credit card debt
Mounting credit card debt can pose a serious threat to your financial health. If you are planning to improve your financial stability, ensure to do away with credit card debts. Suppose you have multiple cards, use only one card for the time being. Do not close the credit account of other cards because it can affect your credit history. However, you can take measures to clear off the debts on the unused credit cards by paying an extra amount. Paying just the minimum due amount would be of no help if you are planning to be debt free by the end of the current year. Closing the credit accounts is likely to reduce the length of the credit history. If you have a very bad credit card debt, then think of credit card debt consolidation.
Use debit card
You should be able to judge between a necessary purchase and an unnecessary one. Use cash or your debit to make payments for your purchases. This way you would be able to keep track of your money and also control your urge to spend on unnecessary purchases.
Open a savings account
One of the ways to get out of debt related problems as well as to curb your urge to spent is by opening a savings account in a nearby bank. Ensure that a small amount goes into savings every month. Apart from that, whenever you have the urge to spend, put down some money into the same account. In this way you would be able to save and later use the saved amount to clear off one of your debts.
Remember, money that is borrowed using a credit card or through a loan has to be repaid with a whopping interest irrespective of the value of goods/services that are purchased. There are good debts and bad debts. Credit card debt is an example of a bad debt, whereas a student loan, business loan or a mortgage loan is considered good debt. However, if you are in debt, never hesitate to go for a debt advice. It is never too late to approach a debt counselor who can help you make a plan to repay your debts or apply for a debt consolidation.
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