Indulging in all sorts of luxuries can be easy, especially when banks are ever eager to dole out loans and credit cards, but it is not advisable to live a life burdened with debt. For many of us, debts act like traps, as we keep taking on fresh debts to try and eliminate old ones. However, with a little bit of restraint on your expenses and proper financial planning, you can achieve debt relief and enjoy a debt-free life.
Here are the five best ideas for living debt free:
- There is no better option than saving for your future needs or the things that you wish to buy. For example, you can save regularly to fund your holiday travels, the car that makes you envious of your colleague or neighbor, renovation of your house, or a professional degree you’ve always wanted to pursue. You will also need to make a list of all your desires in order of priority and invest your savings accordingly. Your savings can be the best way to fulfill these dreams.
- You should consider creating an emergency fund, which, as the name suggests, should be tapped only in times of emergencies such as accidents or other medical needs. So, at such times, you will not have to search around for debt help.
- Do not take a fresh debt to prepay or repay your existing debt obligations, as you run the risk of falling into a debt trap. If you ever need to take on a new debt to pay off an existing one, make sure that you get a lower interest rate and save on other expenses.
- Use cash or your debit card for paying most of your expenses and avoid credit card usage. It may be tempting to use credit cards for buying things that you cannot otherwise afford or are out of your budget, but credit cards are one of the biggest factors pushing you into a debt trap. Even when you use credit cards, make sure to pay the full outstanding payments within the due date to avoid paying any late payment charges and interest.
- If you are already running up debt, make it a habit to pay more than the minimum amount due every month. This way, you can keep on reducing your outstanding principal regularly and the debt will be payed off ahead of schedule. However, you should first consult your bank to make sure that you are not charged any prepayment penalties.
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