Debt Free Living For A Worry Free Life
Debt free living! Sounds great doesn't it? A life with no money worries
and the freedom to spend your money as you wish. Unfortunately for a lot
of us paying off debt and getting out of debt is a daily occurrence and
something we have to incorporate into our monthly budgets. This is where
a frugal lifestyle will help and will make things a lot easier to cope
with.
Lets us not be down hearted, so we have some debt, that doesn't mean that it
has to rule our lives. Instead lets work towards a debt free living
and be in control of our own financial futures.
Debt: Good or Evil
Having debt in our lives is not necessarily a bad thing, after all
how many of us would be able to have our own homes or cars without it.
It allows us to have things today rather than tomorrow and for very
expensive but very necessary items it is probably the only way we would
ever be able to own them. So having some debt is not a bad thing, the
trick is to make sure that the debt we do have is the best value for
our circumstances and that we are not paying off more than we should
be. It is also important to think of debt as a temporary state and not
one that will dominate our whole lives and to do this we should only
be getting into debt when we have no other options.
How serious is your debt?
Knowing how much of a serious issue debt is for you personally is vital
to taking charge of your financial problems and the first steps towards
debt free living. So ask yourself:
- Am I at the maximum limit on my credit cards?
- Can I pay all my bills on time every month or do I incur late penalty
fees?
- Do I borrow money to pay off other debts?
If this sounds like you then you have a debt problem and if something
is not done soon could turn into a serious debt problem. Time to take
control and put your frugal living plan into action.
 Take
the steps to debt free living
Step 1. Stop making your debts worse. If you continue to spend
more than you earn and keep adding to your debt bills, you will never
get out of the debt trap. SO first things first, CUT UP YOUR CREDIT
CARDS. If you can't use them, you can't add to the debt.
Step 2. Make a budget. Sit down with all your facts and figures
and work out a serious monthly budget and project it into the future
until your debts are paid off. By setting a visible goal date of when
you will be debt free, you will make the journey a lot easier.
Step 3. Be Frugal. That's what this whole web site is all about.
Change the way you think about money and your spending habits and take
a fresh look at the way you live your life. Soon like me, you will realise
just how much money you have been wasting and that by living a frugal
lifestyle you will discover how debt free living is a real possibility.
It's a great feeling.
Step 4. Organise your debt. Look at in detail what each of your
debts cost you and see if you can move your debt to a cheaper interest
rate. Consolidating credit card debt can be a good option. Instead of
trying to pay amounts off of different cards every month, lump the debt
onto one card (preferably one with an interest free) period and pay
off one amount each month. It is much easier to manage and you will
have a chance to pay off all the debt at a lower interest rate. However
you should organise the consolidating yourself to ensure that you get
the best deal.
Step 5. Creditors. If you have other debts that you are finding
difficult to pay off each month, the best option is to pick up the phone
and ask them if it is possible to reduce the monthly payments. They
will usually be happy with this as it will extend the debt period and
they will earn more interest, which doesn't sound good but is better
than being taken to court over non-payment. If your creditor will not
do this for you though, you should contact a credit-counselling agency
who are expert at talking to creditors on your behalf and who may be
able to sort out the problem for you. The best place to look for these
agencies are on the internet, if you live in the US then start your
search by visiting the National Foundation For Credit Counselling.
Step 6. Savings. If you do have any savings, use them to pay
off debt. In the long run you will be saving yourself hundreds if not
thousands. Remember debt interest rates are much higher than savings
interest rates.
Debt crisis
If you have tried absolutely everything to reduce your debt but simply
cannot meet the monthly repayments no matter what you do, then you are
in a debt crisis and need some serious help. If you want to have a debt
free living in the future, dealing with your crises NOW is an absolute
must.
What to do
Step 1. Tell your family about your problem, don't try and hide
it. A problem shared is a problem halved, this is certainly true and
even if they cannot help you financially they will be able to give you
personal support.
Step 2. Talk to a free debt counsellor service (Never pay for
advice like this), like The Consumer Credit Counselling Service in the
UK, and the US trustee program in the USA will find you free counsellors
in your area.
What not to do
1. Never use companies promising to reduce your monthly debt bills
each month by lumping all your debts into one. Their interest rates
are very high and your debt will be extended over a far longer period
of time, costing you much, much more and reducing your chances of debt
free living.
2. Don't take out other loans to pay off debt if they will cost you more
in the long run than the original debt. Especially stay clear of loan
sharks, cheque cashing agencies or any one offering to look after your
debt for you.
3. Don't file for bankruptcy if at all possible. Bankruptcy should
be looked upon as definitely the last resort; it is not the quick solution
so many people think it is. This is what filing for bankruptcy really
means:
- Selling your home if you have any collateral in it.
- You have to close your bank accounts and it may be difficult for
you to open new ones.
- You cannot start a new business while you are under an undischarged
bankruptcy.
- The stigma of being bankrupt may harm your chances in the future
of receiving any credit including a mortgage and may even harm your
chances or getting some types of work.
As you can see it is definitely not an easy solution, there are so
many ways to reduce debt that it should never be necessary to declare
bankruptcy (unless you're a multi national company of course). Instead
work towards a debt free living, small steps forward are better than
standing still, no matter how long it takes, you could and can realise
a debt free future.
Top
of debt free living page
|
