A lot of people now are struggling financially because of the ongoing economic crisis. This is not only in the U.S but a large part of Europe as well. One of the culprits of this crisis is the debt burden, both on the national as well as individual level. If you’re one of the people with a debt burden then this is the article for you. The following lists the top 5 ways which you can implement to totally clear your financial responsibilities.
Get rid of your credit card
Credit cards were designed not only for convenience but to provide an extended purchasing power for cardholders. But that added capability to spend is essentially translated to debt. If you’re using your credit card, you’re not really purchasing from the grocery or department store. Instead you are borrowing financially from your credit card company.
There should nothing be wrong with the use of credit cards. Unless if the cardholder is not responsible enough on his or her purchases. Instead they simply use this plastic money anytime he or she wants. Instead of using credit cards, you should learn to revert back on paying cash.
Pay more than the minimum
You might think that your credit card issuer or other lending companies are gracious enough because they are allowing you to pay only a minimum percentage of the total amount due from you. This is not true. Although you are paying a minimal amount every month, it won’t do much help in clearing out that debt burden. This is because the remaining balance will still cost you a certain percentage of interest which will again added to your next month’s bill. Pay able the minimum repayments in order to reduce those compounding debts.
Create and adhere to a financial budget
The main reason behind the creation and adherence to a budget is for you not to spend more than the amount you earn. The budget will enable you to eliminate the luxuries that you don’t need. And if you really want to purchase some of these luxuries, you should first learn to save. Write your budgets down instead of trying to mentally figure out what you can spend. This visibly tracks your spending activities.
Augment your income
If you are struggling on paying your debt burden with your current salary or income, then you should find other means of augmenting or increasing the monthly earnings you get. You could do part-time jobs or businesses. The added income should be dedicated in paying off your debt burden.
Start with your smallest and short-term debt burden
Examples of petty loans which have a short-term maturity date are payday loans, cash advances, personal loans etc. You should start paying off these smaller and short-term debts first than the larger and long-term ones. Why? Because short term debts especially those unsecured are the most expensive in terms of interests and penalties. A payday loan for example can cost you around 10-20% interest for just a short 1 month period while a vehicle or house mortgage is only at 6 to 12% per year.