Five Steps to Get Out of Debt

When you listen to people talking about money, they want to know how to save money and reduce existing debt. The good news is that getting out of debt is possible.

Here are 5 top tips on getting out of debt:

  • Get rid of your credit cards.

Too many people are buying things that they simply cannot afford through credit cards. They think that they can pay it off slowly but soon find that making just the minimum repayments is too difficult.

While the minimum repayments may help you, it will be difficult to have complete freedom from debt. The interest will continue to pile on so you will only clear a couple of dollars each month. $1000 will take 22 years to clear if you choose to only make the minimum payments!

  • Avoid the hassle of credit cards by buying in cash.

Save your money to buy your luxuries and only buy things that you really can afford. Use cash for luxury purchases. Everyone finds a luxury that they really want but avoid using store credit. By paying outright, you will be able to enjoy your items instead of constantly worrying about the next monthly payme

A new toy becomes something that you wish you had avoided when you realize that you have to watch your budget over the next year or two.

  • Create a budget that is realistic and involves debt repayment.

 Budgeting is great as long as it is realistic and manageable. A budget will help to bring financial freedom and help you build a nest egg. You will be able to create a plan for your spending so you can afford the necessities and the luxuries – and clear your debt!

This budget has to include everything you need in your life, including mortgage or rent costs, utility bills, food and vehicle costs, your savings, luxuries and recreational costs and your debt repayment plans or monthly repayments.

You must have the repayment of your debt in there; otherwise you will never get out of debt. By including debt repayment, you will find yourself out of debt quicker and be able to use that money on yourself.

  •  Ask for help when you need it.

There are many financial advisors, credit counsellors and accountants who will be able to help you with budgeting and debt management. Never be afraid to ask for help if you need it, but make sure it is from a professional in the financial industry.

Accountants, credit counsellors and financial planners understand the world of debt, savings, taxes and investments. They will be able to help you get your finances in order so you will be on your way to financial freedom. They will also help you with your decision about your money after you are out of debt.

  •  Talk to your creditors about better rates.

The majority of people borrowing money assume that they have to stick with the interest rates that their creditors set. However, you can gain lower rates if you just ask.

Make the effort to contact your creditors, whether that is credit card companies, banks or a loan provider. You may find yourself with a lower interest rate and paying off more each month.

This is often the case if you have proven to be sensible with your money and have good credit. It is also often available for those who have shown an improvement in their credit.

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