Getting out of debt is hard but it’s not impossible! Unless you suffer from dire financial straits or from an emergency, you won’t understand the worth of saving your dollars. It is only when you face the multiple financial odds of life that you know how important it is to save money systematically and stay off the edge. It has been seen that most debts are caused due to lack of foresight or just simply bad spending habits that stacks up a mountain of bad loans. The only way out of this debt trap is to change the bad habits to good and the discipline to pay off little by little and without taking resort to further loans. Although there are debt consolidation loans that can be taken in order to combine your high interest liabilities, but this is like a fighting-fire-with-fire approach towards debt reduction. Check out the ways in which you can repay debt on your own and avoid resorting to personal unsecured and secured loans for debt repayment.
- Take the final decision that you want to get out of debt: This sounds pretty obvious but the fact is that the final progress towards debt reduction begins when you make the real decision. If you owe more than what you can afford, it’s high time that you decide that enough is enough and that now is the time to be debt free for good. Are you ready to adopt a financially disciplined life? Are you ready to follow a budget and take good care of your personal finances?
- Adopt the DOLP method to get rid of debt: Well, DOLP stands for ‘Done on Last Payment’ and there are many financial analysts who will teach you the process of stacking your debt, racking your debt and finally hacking your debt. This is the way in which you see how much debt you owe, who you owe the debt to, figure out the order in which you will repay your obligations and then start making the minimum monthly payments on each card except the one that you make a top priority card.
- Craft a frugal budget and follow it: You should craft a frugal budget and follow it throughout the month so that you have enough funds with which you can make ends meet. A budget can help you eliminate all the unnecessary expenses and also keep a close watch on your expenses and income. You can make sure that your expenses are always lower than your income through a budget. Follow it throughout the month and then make required adjustments at the end of the month.
- Accelerate your mortgage payments: When you have high interest debt obligations and mortgage liabilities too, you should always try to repay your home mortgage loan payments first. As your home is placed as collateral to the secured loan, you should always try to make faster payments towards your mortgage loan. Try to make an extra payment in a year or twice a year so as to help yourself avoid any further mess with your home.
- Avoid the debt consolidation and debt settlement offers: Yes, you might get tempted by the low interest rates on the debt consolidation loans and the offer by the debt settlement companies to waive off certain portion of your balance. But you need to avoid succumbing to the temptation of taking resort to such offers as most of them might not be successful. Without getting the right rate on your debt consolidation loan, if you choose to combine your debts, you might lose your dollars on accumulating interest rates throughout the extended term of the loan.
Therefore, when you’re on the verge of surrendering with your finances, you should follow the above mentioned steps. Stay out of debt as much as possible and keep saving money so as to help yourself avoid taking out new loans to repay older ones.