Six Steps to Get Rid of Personal Debt

Most of us need that occasional boost of finances whenever we find out that our income falls short of our spending. We borrow money from various sources—friends, family members, banks, credit cards and even loan sharks! But what happens if you accumulate more debt than you could ever handle?

personal debt

Here are some tips to help you get out of the deep hole of personal debt.

1. Take stock of all the debts you have.

Go get pen and paper and list down EVERY SINGLE LOAN AND DEBT that you have. Your debt may have come from banks, credit cards, loan sharks, friends and family members. Take note of all of them. Add them all up so you can get a good idea of how much you owe.

2. Set a goal for repayments.

After writing down all your loans and personal debt, set a goal when you will make full repayment. This step also includes planning for your income and your expenditures. You will need to make adjustments in your cash flow to accommodate the repayments of your personal debt.

3. Cut your credit card.

If you don’t have a credit card, don’t bother applying for one. A lot of banks now offer debit cards as substitute for expensive credit cards. Now, if you can promise to behave with your credit cards and use it only for the installment plans of high ticket items and for online transactions, then go ahead but DO BE RESPONSIBLE!

4. Pay off the debts with higher interest first.

If you have borrowed money from a loan shark with a 30% interest, it is but logical to pay that off first. Talk to your friends and family members about deferring your payments to them. I’m pretty sure they will understand as long as you deliver on your promise.

5. Celebrate once you’re done.

But do not incur debts again unless your life or the life of someone you love is on the line!

6. Maintain a debt-free lifestyle!

Be frugal. Differentiate needs from wants and make sure that you do not spend too much on your wants.

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