When talking about debt elimination, the first option that comes to your mind may either be bankruptcy or debt settlement.
As we know, debt elimination practices can range from simple methods practiced by the debtors to complex hybrid methods which have been developed through statistical analyses.
The ultimate end of the continuum is filing for Chapter 7 Bankruptcy.
In this article, we will look at the simple methods which we could use to get out of debt without having to undergo credit counseling, resorting to debt help or major legal battles such as filing for bankruptcy.
If we know the ultimate objective and contribute towards it wholeheartedly, every simple step taken towards eliminating debt is going to pay dividends.
Let us look at some of those simple steps which could lead us out of debt.
The obvious first step is to formulate and arrange our day to day activities and expenses in line with our monthly income.
Do not overspend.
You need to take a conscious decision as to what you really need in life and what you do not want.
This decision will make you revisit your monthly expenses and you will have to cut down the expenses which are non core i.
e.
expenses on education, food and medicine cannot be reduced but unnecessary expenditure on luxurious goods can compromised! So, the bottom line is, we need to eliminate unnecessary expenditure in order to eliminate debt.
For us to sustain whatever deductions we were able to achieve on the debts, we now need to use sound budgeting principles in our day to day lives.
Without a budget, you will not have a proper planning as to how your income is going to be spent.
You will not be able to prioritize your spending and will end up with an empty pocket when it comes to some of the major expenses such as rent and other loan repayments which generally fall due towards the end of the month.
Lack of financial planning has been a major factor which led most of the people towards the disaster zone.
You can also use some of the standard debt reduction techniques such as Snow ball method and Interest rate method to eat into the debts one by one.
Other options are also available.
These options will require negotiations with your lenders in order to be effective.
For instance, you can opt for debt consolidation.
You can also negotiate on a substantial reduction in interest rates to save money that is spent on penal interest.
However, the effectiveness of the debt elimination process and the long term sustainability of your financial position will clearly depend on sound financial planning and frugality.
As we know, debt elimination practices can range from simple methods practiced by the debtors to complex hybrid methods which have been developed through statistical analyses.
The ultimate end of the continuum is filing for Chapter 7 Bankruptcy.
In this article, we will look at the simple methods which we could use to get out of debt without having to undergo credit counseling, resorting to debt help or major legal battles such as filing for bankruptcy.
If we know the ultimate objective and contribute towards it wholeheartedly, every simple step taken towards eliminating debt is going to pay dividends.
Let us look at some of those simple steps which could lead us out of debt.
The obvious first step is to formulate and arrange our day to day activities and expenses in line with our monthly income.
Do not overspend.
You need to take a conscious decision as to what you really need in life and what you do not want.
This decision will make you revisit your monthly expenses and you will have to cut down the expenses which are non core i.
e.
expenses on education, food and medicine cannot be reduced but unnecessary expenditure on luxurious goods can compromised! So, the bottom line is, we need to eliminate unnecessary expenditure in order to eliminate debt.
For us to sustain whatever deductions we were able to achieve on the debts, we now need to use sound budgeting principles in our day to day lives.
Without a budget, you will not have a proper planning as to how your income is going to be spent.
You will not be able to prioritize your spending and will end up with an empty pocket when it comes to some of the major expenses such as rent and other loan repayments which generally fall due towards the end of the month.
Lack of financial planning has been a major factor which led most of the people towards the disaster zone.
You can also use some of the standard debt reduction techniques such as Snow ball method and Interest rate method to eat into the debts one by one.
Other options are also available.
These options will require negotiations with your lenders in order to be effective.
For instance, you can opt for debt consolidation.
You can also negotiate on a substantial reduction in interest rates to save money that is spent on penal interest.
However, the effectiveness of the debt elimination process and the long term sustainability of your financial position will clearly depend on sound financial planning and frugality.
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