Market full of credit cards offering benefits and cash rewards are quite tempting for consumers. Credit cards are so easy to get, and people have no shame or hesitation in getting loan. Using loan money is fun but when the debts collects at month end and you have not enough cash to pay off loans, makes you very stressful and depressing.
You cannot avoid taking loan in financial crisis for a few times, but it takes many years and a lot of money in term of interest, to pay back debts.
Plan different strategies to pay off debt as quickly as possible, to live a hassle-free life with your family. Here are some debt reduction tips you need to apply in your life.
You should know how much you are earning and where your money is going. Make a list of all your bills and debts, with their interest fee. Make a review of your overall finances and check where every penny is being used.
After creating a list of every loan, from high to low, you will realize which loan to pay off first. You should plan to pay back highest interest loan, first.
When you know that your monthly income is not enough to pay loans quickly, you should find some other side job or income to make more money to pay more bills.
Freeze credit cards
You should stop creating more debt by not getting more loans and also stop using your credit cards. If you find credit cards too tempting and cannot resist using them, freeze them.
Set a goal
To remind you of your loan payments, tape the list of loans on your computer and set a goal. This list will remind you to pay back on schedule. Seeing the number of debts going down will motivate you for more work.
Increase the loan amount
Debt is a huge problem till it resolves totally. Make a debt elimination strategy to reach your financial goals. Take the responsibility seriously and start doing something about it. Whenever you get extra money in the form of bonus or increment or gift money, increase the loan amount to get rid of debt.
Make a budget
Making a budget and start living according to it seem boring sometimes, but to get rid of loan as soon as possible it becomes important. Do not tempt yourself with fancy shopping and unnecessary items. The money you are going to save, means more money to pay debt.
Start an emergency saving fund
You should start saving while paying back debt. With a ton of loan amount to pay, start managing finances by making a saving fund for emergency situations. While saving every penny count, and it will grow with time. Make a list of unused and unwanted items and gifts and sell them to get money.
If it is possible to get low interest rates, try consolidating our different loans in one. But talk to the lenders before taking this step, otherwise it may not be in your favor. One loan is easier to manage than six or seven loans.