First thing I would like to mention, like all other problem, you can handle excessive debt by having a good insight of the situation and taking smart moves about it.
Maybe people don't want or not motivated to do anything because they think it is a hopeless situation and getting out of debt is impossible.
Now maybe you like to know what you should do to handle your debts,
Step1: know your present financial situation : it is the basic of financial independent. You should know your debt about and interest you have to pay per month and so on for instance, if your monthly income is 4000 dollar and you are paying 200 dollar interest per month. Than you are paying 5 % (percent) of your income monthly.
Step 2: Evolution part: You are paying this extra interest because you are enjoying the things you bought early. But you would have had to save to purchase them outright. But you have to ask yourself, is that worth 5% of your income?
It may be happen all your money is used for paying interest but not for the principal of the debt. Yes it is an extreme case . But you should generally compare interest to principal of any kind of debt for a long period.
You can use calculator from website to know the interest for your debt situation. Say, you owe $10,000 and interest is about 7%. And you can use that calculator to know that. You could pay only $116 per month, but it would take you 10 years to pay it off. The interest would cost you $3,933 - almost 40% of the total amount.
Step 3: develop a realistic budget: When you know your situation you can take farther steps. Like develop a budget that will allow you to make payments as large as you can handle to pay the debt of yours.
Step 4: 'snowball Method' Second thing you can done is you can use 'snowball Method' and start paying your smallest bill first. Then apply what you were paying to the smallest to the next smallest (now the smallest), until you've reached the end.
You may also think about reverse of the above method ('snowball method'). Its also good one to follow as you will need to give less interest charge for your debt. But problem is you may get less motivated as you will less progress in your situation. by the way , in this method you have to start with biggest debt and then with the next biggest debt.
Step 5: Stop borrowing farther: stop borrowing things or you should not take any more debt until you paid the first to a good level. This level may zero for a credit card junkies and for others it may be 5%.
Beside above steps you can think about debt consolidation if you like.
But two hardest thing for lot us to have a good insight and making farm decisions for the long term for getting out of debt tips. But these are two basic initial steps for a financial freedom. - 30462
Maybe people don't want or not motivated to do anything because they think it is a hopeless situation and getting out of debt is impossible.
Now maybe you like to know what you should do to handle your debts,
Step1: know your present financial situation : it is the basic of financial independent. You should know your debt about and interest you have to pay per month and so on for instance, if your monthly income is 4000 dollar and you are paying 200 dollar interest per month. Than you are paying 5 % (percent) of your income monthly.
Step 2: Evolution part: You are paying this extra interest because you are enjoying the things you bought early. But you would have had to save to purchase them outright. But you have to ask yourself, is that worth 5% of your income?
It may be happen all your money is used for paying interest but not for the principal of the debt. Yes it is an extreme case . But you should generally compare interest to principal of any kind of debt for a long period.
You can use calculator from website to know the interest for your debt situation. Say, you owe $10,000 and interest is about 7%. And you can use that calculator to know that. You could pay only $116 per month, but it would take you 10 years to pay it off. The interest would cost you $3,933 - almost 40% of the total amount.
Step 3: develop a realistic budget: When you know your situation you can take farther steps. Like develop a budget that will allow you to make payments as large as you can handle to pay the debt of yours.
Step 4: 'snowball Method' Second thing you can done is you can use 'snowball Method' and start paying your smallest bill first. Then apply what you were paying to the smallest to the next smallest (now the smallest), until you've reached the end.
You may also think about reverse of the above method ('snowball method'). Its also good one to follow as you will need to give less interest charge for your debt. But problem is you may get less motivated as you will less progress in your situation. by the way , in this method you have to start with biggest debt and then with the next biggest debt.
Step 5: Stop borrowing farther: stop borrowing things or you should not take any more debt until you paid the first to a good level. This level may zero for a credit card junkies and for others it may be 5%.
Beside above steps you can think about debt consolidation if you like.
But two hardest thing for lot us to have a good insight and making farm decisions for the long term for getting out of debt tips. But these are two basic initial steps for a financial freedom. - 30462
About the Author:
B Shahriyar, who has been teaching about handling debt for last ten years, has made a website on get out of debt to educate others about handling debt. for limited period you can read the articles for free by visiting his getting out of debt tip site.
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