If being in debt can cause fraught experiences, how much more when you’re trying to get out of it? One of the main reasons why people incur debt is because of overspending. When this happens, they often rely on credit cards as their source of emergency fund. In fact, based on the 2015 Consumer Literacy Survey, one-third of households in U.S. suffer from monthly credit card bills and dues. Be that as it may, we will give you a guide on how you can achieve financial freedom.
- Live Within Your Means
To get out of debt, the first thing you need to do is to enforce measures that will put an end to your spiralling debts. The best solution? Live within your means. Ascertain how much you’ll need to carry on monthly. You can also opt to a “cashless diet” wherein you’ll leave your credit card each time you go out. When making a purchase, use your debit card instead to ensure that you will not exceed your limit.
- Institute a Payment Plan
People tend to pay first debts that have the highest interest rate. Logically, it is correct; however, you should settle first smaller debts. Tally all your outstanding payments and arrange them from smallest to largest, regardless of the interest rate. Begin with quick wins. This will give you the drive and momentum to completely break free from your financial obligations.
- Free Up More Money
For you to settle your outstanding payments, try to find areas where you can reduce your expenses. This way, you will free up more money that you can use in paying your debts. Aside from getting thrifty, try looking for other sources of income (e.g. freelance jobs).
- Seek Assistance from Creditors
Before things start to get way out of hand, seek for credit counselling. They can help you better manage your debt and finances. There are also collection agencies such as ACM Group that offers different payment plans to help individuals get back on track. The company also has conscious, halting collection activities against individuals affected by bushfires last year.
If you are a business owner, collection agencies can purchase your debt. This way, your enterprise will be provided with instant access to cash flow. They can also act as a mediator in dispute resolutions involving your debts. Through this, you can settle your financial obligations without the costly lawsuits or court proceedings.