Simple Ways to Avoid Debt

debt issues

Nobody wants to be in debt. Yet in today’s world of consumerism, it creeps in on us unexpectedly from time to time.

The best advice you will get from people when it comes to avoiding debt is to avoid being in debt. But as you must be aware by now, that it is easier said than done.

Strategies You Can Follow

To help you find an easy solution to end the never-ending cycle of loans, mortgages, and debts, here we have put down some simple-to-follow ways:

  • Make a plan for your budget
  • Include a To-Do expenditure list in the plan or to put it simply the unavoidable expenditure, for each month
  • Chalk out all the unnecessary or frugal spending from the previous month
  • Try to avoid them at all costs
  • Keep a tab on your credit card(s)
  • Set a priority reminder on any pending dues or bills that you need to clear as fast as possible
  • Try to avoid taking loans from banks or otherwise, if not essential
  • Make a habit of paying the whole amount either in cash or online transfer, instead of indulging in EMIs, monthly payments or other such schemes
  • When applying for loans try to stick to those lenders that offer you the lowest interest rates
  •  It is always better to stick to reliable lenders
  • Keep a check on impulse buying
  • Always keep a separate account as emergency money. It can come in hand, just in case you need to get out of a sticky debt situation
  • Do not invest in shady schemes that offer unrealistic returns
  • Lessen the number of cards you keep
  • Take the help of available apps that can help you organize and manage your finances better

Even if you find yourself landing in debt despite all the steps you took, you can still remember these few simple things,

  • Panicking would not help you
  • Try to make a step-by-step plan to figure your way out
  • If you have already started the emergency account, see how much of the debt you can clear immediately from that fund.
  • Don’t take further loans from anyone to clear your current debt!

Final Note

Have faith in yourself as surely this too shall pass. Finally, if you need some light-hearted inspiration to help you feel better and to understand that you are not the only one to go through debts, go ahead and watch ” Confessions of a Shopaholic.” If every other method fails, a good movie can surely give you a boost!

Important Things to Consider When Looking for Debt Relief

Being in debt is stressful – for many, it is a reality that weighs heavily on their shoulders, keeping them up at night. Some people even flinch at the sound of their phone ringing, fearing that a debt collector will be on the other end. 

So what is a person to do? Seek financial help, of course, but before you go about it, make sure that you do your research first. There are a few different options for debt relief and you want to make sure that you are choosing the right one that works for you.

Debt Consolidation Loan

debt relief

A debt consolidation loan is a popular option when it comes to finding help out of a bad financial situation. It is considered a money management tool that lets you combine or consolidate your unsecured debt (like credit card debt, personal loans, phone, and hydro bills, etc.) into a single loan from a single lender. The lender will pay off all of your unsecured debts while gathering the combined sum into a single loan with a set interest rate, which you are responsible for paying back.

While it sounds good on paper, make sure you do your research before committing to a potentially bad credit consolidation loan that leaves you with even higher interest rates. That’s right – while the aim is to achieve lower interest, this isn’t always an option with some lenders, especially if you are considered a high-risk borrower. High-risk borrowers can expect interest rates of 14 percent to over 30 percent from second-tier lenders, which can do more harm than good to your financial situation.

The other problem with these types of loans is that they can be difficult to obtain unless you have an acceptable credit rating or collateral like property or other assets. This is unfortunate because people who truly need the help are the ones who are going to be denied assistance.

Debt Consolidation Program

Consider an alternative approach with a debt consolidation program provided by a non-profit organization dedicated to providing financial management services to those who need it most. While identical to a consolidation loan, the biggest difference here is that there is no loan involved and anyone can qualify to enter the program and receive the help of a certified Credit Counsellor. Not only will they consolidate your debt, lower your monthly payment, and lower (or completely stop) the interest, but they will also stop calls from collectors and guide you through the entire repayment process.

What’s more is that a Credit Counsellor will also give you the financial management skills you need to ensure you don’t fall right back into financial trouble after you’ve completed your repayment program – less than 1% of clients will ever need to do a second program. This extra bit of care just goes to show that they are truly interested in helping and not just a lender looking to collect interest off you.

So if you’re seeking debt relief, make sure to find the right kind – choosing to participate in a program vs. a standard loan can really make a huge difference in your journey towards financial wellness.