Despite of regular incomes there many who carry the burden of debt, and fail to save anything for life after retirement.
Staying out of debt is not only possible but also very much achievable.
Think over the few easy steps you can use to get out of debt:
Enlist the debt you owe:
You may have loans to be taken care of . It can be home Loan, personal loan, car loan, education loan, credit card dues, , loan from insurance policies, and so on. Note down basic details like how much you owe, the current interest rate, EMI amount, number of months (tenure) etc, for each and every loan that you are bound to pay.
Bargain for better interest rates:
If you could negotiate the interest rate and bring it down, you can come out of debt faster. Banks will be happy to negotiate as this will, in fact, reduce their expenses. Balance transfer offers from credit cards are also a good way to reduce your interest rate.
Categorise your debt
A house loan can increase your net worth over a period of time. This kind of loan gives you tax benefit also. For a businessman, car loan provides some tax benefit. Each one of your debts needs to be categorised based on such factors. This will help us in comparing different loans.
Keep yourself from taking fresh loans:
You need to make a vow that you will not be adding any fresh loans until you come out of all your debts completely. Think, for a moment, how you will feel when you become debt free as this will give you a lot of positive energy to come out and stay out of debt.
Postpone buying major assets:
Buying property or any other major asset needs to be postponed until you get rid of your debt. With your new ownership comes the new – probably large – and unpredictable expense. This can make you deviate from your debt payoff plan and, at times, make you bear unpleasant and uncontrollable consequences.
Change your spending habits:
Being in debt obviously means that you have been living beyond your means. The solution is very simple: spend less and you will get out of all your debt soon. You need to change your spending habits. If you buy things you don’t need, you soon end up selling things that you do need. Don’t save what is left after spending; instead, spend what is left after saving.
Source – Holistic Investment Planner