Permanently being in debt, as a rule, leads a person to stress and a negative attitude towards life. If you took a loan or a loan, you often think that the debt needs to be repaid. And circumstances such as losing a job, health problems, or just an increase in expenses due to the appearance of a child will not in any way force the bank to cancel or freeze monthly loan payments.
Follow this 5 simple steps
If you are one of those who have been in debt for a long time and do not see an end to this in the near future, then we offer you 5 simple steps that should help you get out of debt.
1.Make it a rule not to borrow money anymore.
If you want to get rid of debts as soon as possible, the first thing you need to do is stop taking new debts. You need to change your lifestyle and exclude from your life such kind of own financing as the acquisition of a new debt. To do this, first of all, give up the impulsive purchases, if you have no money for them at the moment.
2. Set the minimum cash balance in your pocket
You need to be prepared for various emergencies that may require so-called unforeseen expenses. And so, just, on these expenses there should be a “stash”. Every time you want to buy something not quite necessary – stop yourself and, after coming home, set this amount aside for later.
3. Carefully monitor your budget.
This moment is perhaps the most important of all. More information about home money article written on our site. It is especially important to take home money seriously if you are in debt. The most important thing is to summarize your monthly expenses and determine whether you are in a positive or negative balance. If the balance is positive – this is not a reason to relax and, best of all, use the money for the second item of this article or increase your total payment on loans. If the balance is negative – you need to look for ways to avoid this situation in the future. Find additional income. If you work on piecework wages, talk to your superiors about the fact that you need additional income for some time. If you have a time-based payment – it’s time to find a second job. Let it will bring a small income, but it may well be enough to follow your new financial plan.
4. Organize the payment of debts
There are two approaches to consider. The first is to choose a loan with the lowest total debt, while the interest rate on the selected loan is not important. You pay less debt faster, and you will have confidence in your abilities and an understanding that it is really possible to close a loan. The second approach is to choose a loan with the highest interest rate. It seems more logical, because you will lose less money in the form of interest for a long time. Choosing one or another approach is very important to stick to it until the end.
5. Any additional finance should be involved in debt reduction.
This may be the proceeds from the sale of the car, tax refund, or, for example, you won a bet. The more money you use to pay off debts, the faster these debts will disappear. Debts should not haunt you all your life. Develop your debt reduction plan and have patience as it may take a long time.