Get Rid Of Debt Systematically

Nowadays, with banks and other financial institutions offering personal and other loans with the minimum of fuss, it is rather tempting to borrow and fulfill ones needs and desires. But be warned, servicing the debt may not be as easy as spending the borrowed money.

As one takes another loan to repay the first one, the process replicates and the person soon finds himself caught in the debt trap.

Financial education is the first step to prevent financial problems. These days counselors help people understand financial budgeting concepts that help people manage money and credit in a better way.

These following four steps help one preserve his financial freedom and avoid entering into a debt trap.

• Take a part time job: There is no pain free formula tat can help a person get rid of debt. One way of doing so is taking up a part time job to increase household income. Alternatively, the spouse, if unemployed, must be encouraged to take up a job. Set goals and plan how much is to be set aside for eliminating the debt in a given period. Remember that changing one’s lifestyle and consciously spending less is the key.

• Upgrade your skill set to get a better job: At times as the needs increase the salary doesn’t. In such a situation, consider yourself worth more. Every job and job skill has a market and a market value. Go for a training programme that can help you get a better paying job.

• Escape the credit card debt: Credit card is the most dubious debt instrument in the market today. Interest charged on credit cards is among the highest – varying between 36 to 42 percent annually. If you can’t repay credit card debt on time and tend to delay it every month, stop using it. If you use wisely, restrict yourself to two credit cards, preferably those that offer reward points, annual rebates, or other incentives.

• Initiate steps of budgeting: A realistic and manageable budget helps one avoid debt and even get rid of it. A good budget also helps build up an emergency fund. One should have at least 3-6 months income as emergency fund.