How to be Debt free in one year! (Part 1)

In the modern world of technology it seems as if everything is done online and consumers are lulled into a false sense of complacency into not making note of how much they are spending.

Consumers are able to with a swipe of their card purchase anything they desire up to their credit limit of course.

While it is true that making purchases by using a credit card is enticing, the result of uncontrolled spending is a depleted bank account.

A lot of debt overwhelms not only those who use credit cards but also those who have taken several loans from institutions which they must now continue to pay for in the many years ahead.

It is even worse for those who are self employed as often they struggle to pay various taxes imposed by the government.
If they are unable to pay their taxes on time then they face the added financial burden of paying penalties. They feel trapped by their debt and soon it becomes a race of trying to pay minimum balances before the money is gone.

Many young professionals are also caught in this ‘debt trap’ as they took out hefty loans to finance their education. After graduation, if they are fortunate enough to find jobs, their salaries are too low for them to be able to afford to pay back their loans and still take care of basic necessities.

So what’s the way out of debt?

One suggestion to help with your repayment of your debts is simple,
What about going to your debtors and asking for ‘loan forbearance’?

Forbearance is an authorized period of time during which the lender agrees to temporarily postpone a borrower’s loan repayment obligation.
At the borrower’s request, an extension of time or smaller monthly payments may be authorized by the lender.

This is granted at the lender’s discretion when a borrower demonstrates good intentions of repaying but is temporarily unable to do so. Since interest continues to accrue while loans are in forbearance status this is not to be considered for a long term solution.

Even though we are living in harsh economic times, it is possible to negotiate with lenders before your file is turned over to a collections agency.
It is better for you to go to them rather than wait for them to find you!

The interest on loans can be draining so it’s a good idea if you can afford to pay lump sums or gradually increase monthly payments over a period of time.

The best thing is to avoid debt but if you find that the bills are accumulating, then it makes sense to have a plan of action.
Some persons only pay the minimum balance on their credit cards and ignore the additional fees that they attract by doing so on a regular basis.
Try to put something aside from your paycheque so that the monthly payments are slightly higher.

How do you deal with debt?
Part 2 coming up on this topic so look out for it!

Tags: debt, taxes