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Debt Help & Advice
When will you be debt free? Getting out of debt and staying
out of debt is simple. All it takes is spending less than you
earn, but although the solution is simple, putting it into practice
is hard for many people. The first step is assessing where you
are right now.
Assessing Where You Are Businesses regularly
calculate key ratios that indicate their financial health, and
so should you. Two of the most basic personal finance calculations
are your net worth, which is a snapshot of your current financial
situation and tells you what you're worth (or not as the case
may be) your Debt to Income Ratio, which is your total debt
payments compared to how much money you earn and tells you if
you're carrying too much debt.
1. Get the cheapest debt possible
Get ruthless with the debt you already have. In these days of
low cost credit cards,
with a little bit of research you can find the lowest offers available
that you are eligible for and take advantage of them. While you
are paying off your debt, make sure that you are paying the lowest
interest charges you can find on the debt you still have.
2. Maximum not minimum
Whatever else you do, this is the single biggest thing you can
do to get yourself out
of debt. Your scheduled repayment structure (worked out by
the credit company and each one is different), is set up in favour
of the credit company. It optimises your payments, for their benefit.
You must turn this around and optimise your payments for your
own benefit. The simple way to do this is to add a consistent
extra amount to your monthly minimum payment on one debt at a
time.
3. Re-consolidate, Restructure,
Regret
Reconsolidating can be a useful tool in extreme cases as part
of an overall debt repayment plan that is structured in your favour.
By itself, it can be a double-edged sword that helps you look
like you are getting on top of your debt. It may temporarily get
you out of some of your debt, but it does nothing to keep you
out of it. If you take out a personal
loan to consolidate
your existing debt, make sure it's low interest and keep the
repayment term as low as possible, pay it off as fast as you can.
4. Stop doing it None of the tips will do you
any good if you continue to add to your debt. 5. Be Honest With
yourself first. Tell yourself the truth about your finances.
Be clear about your numbers. Know your financial facts. And
be honest with others. Don’t try to represent yourself as wealthier
than you are.
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