Debts are surely a burden than can make you a slave and curb your happiness and peace. Clearing your debts can allow you to increase savings and invest money for future expenses like a car or a home. This Independence Day, make a concrete plan to break free from the shackles of debt and live a peaceful and prosperous life! Here are 10 ways you can be free from debt:
1.Pay Off Larger Debts
When you make a plan to clear your debts, list all of them down with their amount and interest rates. You should begin by clearing the debts with the highest interest first to avoid further increase in debt.
2.Transfer Your Credit Card Debt
If you have credit card debt from multiple credit cards, you should consider consolidating this debt through your savings or by taking a personal loan with low interest rate. This will help you keep easy track of debts, thereby ensuring your freedom.
3.Try Lowering Interest Rate
If you have long term debts like home loans, it is possible that the interest rates have dropped recently. You can opt for a home loan balance transfer to another bank or ask your bank to lower your interest rate.
4.Sell Unnecessary Items for Cash
You might have a lot of bric-a-brac like old furniture or fixture that can be useful for other people. While doing so, you can also sell your old mobile phone handsets for some quick cash to cover your debts.
5.Audit Your Incomes/Expenses
If you have a lot of accumulated debt, there are high chances of a financial burden. You can turn things around by taking an account of all the earnings and expenses that are incurred by you. By doing so, you can find the root cause of heavy debts and you can plan accordingly.
6.Formulate a Budget
After listing your incomes and expenses, you can plan your expenditure efficiently so that you can clear your debts conveniently.
7.Consider a Second Income
If your current income does not seem sufficient to cover your current expenses, you can try looking for a new job that pays better. Furthermore, if your schedule can allow, you can try working on an additional part time job to have a second stream of income.
8.Create a Savings Fund
After clearing your large debts, you should consider having a healthy amount of savings in your Savings Account. Doing so will allow you to take care of planned long-term expenses and support you during financial emergencies in future. Also, investment options like Fixed Deposits and Green FDs are appropriate for taking care of your long-term goals.
9.Optimize Credit Score
When you start paying your debts, the most important thing is to consistently make payments. Defaulting on your loan or missing your payments can reduce your credit score. Credit scores are important indicators of your financial credibility, without which you cannot secure a credit card or loan in future.
When you create an efficient financial plan, you have to start controlling your expenses. By being thrifty, you are not sacrificing your lifestyle but just ensuring that your future is safe.