How you can manage your personal debts efficiently

| April 12, 2012

Personal debts are mostly inescapable at least during the phase of economic crisis. Most people owe debts to fund personal expenses such as continuing education and buying a home or a car. The problem occurs when it comes to paying off these debts. Millions of people spend most of their monthly income to repay the debts they owe. Fortunately, there are a number of ways through which a person can go debt free and lead a stress-free life.

Ways to manage personal debts and stay debt-free

Here are some effective ways to manage your personal finance perfectly.

  • Debt consolidation – Consolidate any outstanding student loan debt for lower interest rate. A debt consolidation program helps to bring down the interest rate by a considerable percentage. Moreover, it extends the repayment term to pay off the debt. The best thing about debt consolidation is that it won’t hurt the credit score. Debt consolidation is effective in reducing outstanding debts at a time.
  • Personal budget – Create your own personal budget that helps you live within your means. List your monthly expenses including payments toward debts as well as monthly gas bill, rent bill and electric bill. Set aside some extra money so that no shortage of money comes up.
  • Frugal lifestyle – Lead a frugal life; cut unnecessary expenses from your life. Don’t be a compulsive buyer. Buy only what you need. There are so many ways through which you can curtail your spending. For example, avoid eating out; make your favorite dishes at home. Remember, unless you can change your spending habit you can hardly save money.
  • Credit card avoidance – Try to avoid using credit card as it always adds to your personal debts. Even if you use one, make sure it suits your need and spending habit. If you’re flexible in month-to-month balance, a low interest rate credit card would be good option. However, if you pay off your credit card bills every month, then a card with low fees would be a better option.
  • Expert consultation – Visit a professional financial counselor. He or she may help you make a long-term personal budget plan to pay off outstanding debts efficiently and keep yourself from owing new one. You can also contact a reputed debt management company that offers free counseling on how to pay off delinquent debts.
  • Good credit – Cut on your spending and avoid using credit cards to build good credit. Timely payment of bills will enhance your credit and increase credit score.

Live your life within your means. Frugal living always ensures debt-free life. Live frugal; stay debt free.

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Category: Debt

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