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The Best Tips on How to Manage Debt

By Ruth Racey
Published: Thursday, March 21st, 2013

If there’s a word feared by many, it is debt. Despite this fear many still find themselves incurring debt they are unable to break free from. Debt can be brought on by aimless credit spending or some business ventures gone sour and you were already half-way into it. Regardless of what caused it, once you’re in it you need the know-how to, manage it and finally get out of it.

Below will be some tips that have proven to work with some who incurred debts. However, they were able to manage and finally break free.

  1. Using a budget- a budget helps in controlling a person’s spending. It is the best way of accounting for each and every penny you earn. While drawing up one, ensure you have your priorities in line. This helps in curbing impulse buying. Once you’re used to the budget everything will start falling in place.
  2. Avoid borrowing- its financial suicide to take out a loan to pay off another loan. This means that you’ve added a burden on yourself- finding a solution to paying off the second loan you took out. Yes, loans can be beneficial if planned for properly. However, borrowing money while you’re in debt is a bad move and should be completely avoided.
  3. Reduce expenses- when you don’t use up money aimlessly, you’ll have more to do what is necessary. Even with this, you still need to analyze and reanalyze your expenses to take out things that you don’t really need. Your needs should outweigh your wants as the latter can be left for another convenient time.
  4. In the event that you have an outstanding loan that needs to be paid off, it is best to pay a bit more than the minimum amount agreed upon by the lender. With this approach you can pay off the debt in a shorter time than was agreed upon. This can only increase your chances for getting another loan. In the end, paying off earlier proves to be much cheaper than extending to the agreed time of payment.
  5. Save at every opportunity you get- this is for those unexpected situations that come up in life; for the ‘rainy days.’ When doing this, avoid using your credit card as this is adding to your overall debt. Have a saving habit of putting away some money from your monthly paycheck.

With such tips, you can work at paying off the debt without having the trouble of adding more debt to what is already too much. In the end, you’ll find yourself out of debt and being able to breathe free.

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