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Work Out a Monthly Budget
Create a monthly budget that lists all your expenses. Review your budget to make sure that the items you have listed are basic items only.
Use a Single Credit Card
Use one credit card with the lowest interest rate so your debt will not have high interest and not accumulate as quickly. Be sure that the card has a low limit to keep your expenses at the minimum.
Avoid the Minimum Payment Trap
If you want to get out of debt fast, pay more than the monthly minimum amount. Paying the minimum amount alone has very little impact on the amount of your debt.
Put Your Debts in Writing
Gather all your statements and calculate the total amount of your debt. This is a very important step towards freeing yourself from debt.
Build an Emergency Fund
Emergencies are inevitable so, be sure to plan for them by having an emergency fund. This will help you to pay for the emergency without having to get a loan and adding new debt.
Never Touch Your Emergency Fund
Do not use your emergency fund to pay for mortgages or bills. This could land you into serious financial problems.
Avoid Borrowing Blindly
Adopt the habit of borrowing money wisely so that you do not find yourself in a debt crisis. Think carefully before you get loan. If possible, seek help from a financial professional.
Consider A Balance Transfer
If you find that you are paying off your debts but your balances do not go down because of high interest rates, a balance transfer could be a good option for you. Transfer the amount on the high interest rate card to a lower interest rate card to prevent the debt from accumulating.
Spend Less on Entertainment
There are certain expensive habits that you will need to give up if you want to become debt free. Drink your beer at home, exercise at home as opposed to going to the gym and eat at home frequently.
Enroll in a Debt Management Plan
A credit counselor can enroll you in a debt management program to help you organize your finances. You will be taught how to handle your money, as well as creating a budget that will set you free from all your debts.
Snowball the Debt
In this method of paying off debt, you start by paying off the smallest debts first and then finish off by paying the larger debts.
Use Online Budgeting Tools
Budgeting tools which are available online will help you to manage your debts effectively. For example, you can find a debt calculator online that will show you how long it would take you pay off your debts when paying varying amounts.
Change Your Attitude
Adopt good spending habits that reduce expenses such as living frugally. Surround yourself with positive people who will encourage you to get out of debt.
Stop Borrowing More
Avoid borrowing more money to prevent the debt from accumulating. Use cash to pay for all your purchases.
Save More For Retirement
Look for extra income to supplement your retirement account. If you can increase your contribution by just 2%, you will find that the amount increases with time.
Get into the habit of bargaining before making your purchases. You will save some bucks that you can channel into doing something meaningful.
Avoid Medical Debt
Seek medical attention from government hospitals as they are cheaper than private hospitals. It will also be easier to pay off those medical bills as they will not be as high.
Save at Least 40%
Once you have finished paying off the debts, save at least 40% and make purchases using cash. You will live debt free life which is definitely stress-free
A debt settlement program is by far the best and most recommended way of getting out of debt. It enables you to get relief from your debts by paying a lump sum to your creditors. The remaining balance is written off and you are deemed to have fully settled the debt.