Live Debt free!

How much do you owe?

Often this is a sore subject with many consumer. Some owe so much money it makes them unhappy to hear any information about the topic while others feel that owing is a normal part of life and they have no issues with their situation.

There is of course a small minority of persons who don’t owe any or no significant amounts but what about those who do owe?

Types of debt

Some consumers have what can be referred to as short term debt. This type of debt is usually incurred as persons have credit cards or credit lines with the bank which they pay off at the end of each month or at the end of a predetermined billing period.

This type of debt doesn’t really cause a lot of stress unless you have several cards and a loss or reduction to your income. Credit is usually given because lenders have satisfied themselves that the borrower has the capacity to pay back the loan. Credit card limits for example are calculated based on your income and expenses.

All too often though credit card debt can spiral out of control.  Those who spend without realizing that they will have to find a way to repay the funds they spent always end up with too much to repay.  This results in credit card balances not being settled quickly and they incur penalties for paying only the minimum balance but not clearing the debt.

Long term Debts

There are other types of debts such as loans for cars, homes or to pursue higher education. These types of debt take a longer time to pay off as they usually offer consumers years to pay off the debt.

They can seem to be very difficult to get rid of as the interest on these loans prevent the borrower from making any huge dent despite paying the loan for a long time.

Ways to get rid of debt

The best way to live free of debt is to be informed. Gather up your financial statements so that you have an accurate picture of how much you owe. Then rank your debts in order of priority, some might need immediate attention while others are easily paid.

I like using separate bank accounts to help save for repaying the entire loan amount. This account would be separate from the main savings account and the loan account. So this way you can slowly accumulate the funds to make lump sum payments.

Even if you are not able to pay off the entire debt at once, making lump sum payments helps to reduce the amount of money that you owe. It is also important not to incur any fines because of late payments, so pay your loan on time.

Avoid making minimum payments on credit cards, instead pay it off every month. This makes this debt more manageable.

There are a number of companies that offer debt consolidation. This means that one loan would erase all the other smaller debts and instead there would just be one repayment sum at the end of the month.

What are your thoughts? How do you live debt free? Let me hear from you!

Regards,

Teri Ann Renee Paisley

Gleaner online writer

Tags: credit, debt, loans, payments