Eliminating debt in an economy of recession does not have to be an impossible task. With careful planning and smart money management, anyone can eliminate their debt one piece at a time no matter the size. Below are a few tips that you can use to get rid of the debt that is holding you back from financial freedom.
One – Cut up all of your retail credit cards.
Retail credit cards are credit cards that can only be used at certain stores. They have no value outside of that store and serve only to facilitate spending money in that store. These cards should be completely eliminated from your budget if you are trying to eliminate debt. If you have debt on many different fronts, this is the debt that you should eliminate first.
Two – Limit the use of your credit cards to emergency funds.
It is very difficult to get out of debt if you constantly use credit cards. Credit cards should be relegated to emergency use only. Take them out of your wallet and place them in a locked cabinet that is difficult to get to.
Three – Use the snowball method.
Psychology plays just as important a role in paying off debt as any other purely physical financial aspect. The snowball method consists of starting with the lowest debt, paying that off and then moving to the next highest debt. This will give you a sense of accomplishment in knowing that you have completely paid off one of your debts before moving onto the next one. It will also improve your organization because you will not be receiving a bill from so many creditors.
Four – Look for better rates on your insurance packages.
Many people believe that their insurance rates on large assets such as cars and houses are completely nonnegotiable. However, people have access to resources that were not available in the past because of the Internet. It is actually quite easy to find insurance comparison websites whose sole purpose is to compare insurance rates side-by-side. Using resources like this will direct you towards money-saving options for your insurance packages.
Five – Do not be afraid to use loan consolidation.
If your financial situation is quickly becoming untenable, debt consolidation is one of the best solutions outside of bankruptcy. Contrary to popular belief, simply taking on consolidated loan does not lower your credit score automatically. As a matter of fact, it can actually raise your credit score if you are able to keep up with those payments.
Six – Refinance if at all possible.
Now is a great time to refinance your home at a low interest rate. The Federal Reserve continues to keep interest rates at historic lows, and if you can take advantage of this to save more money to put toward debt, you should do it. Keep in mind that refinancing does require a substantial upfront payment in most cases. However, this is a good investment for people who are trying to get out of debt.
Seven – Cut down on impulse buys.
Although you may not believe that impulse buying can actually affect your debt, small purchases add up over time. You can eliminate impulse buying from your shopping habits by creating a list before you go out to shop and sticking to it.
Eight – Always be on the lookout for coupons.
Although the newspaper is fast losing relevance as the premier source of news, it is still one of the best places to go if you are looking for coupons for local retail stores. The Sunday newspaper in most towns is a great investment if you’re trying to get out of debt.
Also, many retailers will offer great deals online that are not available off-line. There are also websites whose sole purpose is to partner with retail stores and offer coupons – be on the lookout for them.
Brent Wayne is a 23 years old housing and finance writer. He mostly spends his time writing blog posts and editorials with a focus on housing, mortgage loans and economy. You could reach him at brent.wayne@yahoo.com.
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