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Getting Out Of The Debt Trap

The Debt Trap

Debt is a four letter word that everybody should be afraid of. Whether it is the result of bad spending habits or unexpected circumstances like medical bills or job loss, debt can prove strenuous for you. Especially, in the current financial climate, it’s not unusual for people to get trapped in the vicious cycle of debt. However, the good news is that debt isn’t really unmanageable. These days, there are countless ways to get debt relief and bring your finances back on track.

Avoid the Debt Trap through Planning

Good planning in your personal finance is essential. Other than paying for your food, clothes and shelter, you also need money to pay off your liabilities. Given that your income is limited andDebt Trap your needs (wants) are unlimited, you need to have a proper plan regarding how to handle your hard earned money so that you get the best use out of it. When it comes to getting out of the debt trap the solution is simple but the implementation is the hard part. Just take comfort in knowing that many people just like you have paid off debts bigger than yours… in what seems like record time when they finally put their mind to it. Following are a few tips to help you to get out of the debt trap and get back on the road to financial freedom.

1) Stop Using Your Credit Cards

There are two types of debt – good and bad. Good debt is debt that produces income for instance a mortgage on a rental house. In that case, by borrowing you have leveraged your money and the tennant will pay off your mortgage.

On the other hand, credit card bills are an example of bad debt. You need to pay interest and probably fees for buying something that you couldn’t really pay for in the first place. If you are running a balance on your credit card, your first step should be to stop using the credit cards. Next look for ways to pay off the balance. Interest on credit cards is one of the highest rates around second only to Pay Day loans and Loan Sharks. If your creditors know you are serious about paying your bills you can try to call your creditors and see if you can get rid of extra fees or negotiate a lower monthly rate of interest. Any amount you save will contribute towards paying off your debts.

Finally, there is a third type of debt (I know I said there were only two) but the third type is in-between it is acceptable debt. An applicable instance of acceptable debt is a mortgage. Although you may not enjoy making your payments each month, at least you are producing equity. It is sort of like paying interest for the privilege of saving.

2) Look for a Part-time Job

Try locating a home based job that could be taken up as a part-time employment. With the Internet at your fingertips, it’s a lot easier to find some profitable home based jobs. You may function as a freelance writer, executive assistant or even Social Media person. If you know your way around Twitter, Facebook and LinkedIn you can make good money managing companies “social presence”. See how you can become a Social Media Manager.

See Also: 10 Awesome Jobs You Can Do From Home , Tips for Landing a Job with No Experience, 3 Alternatives to Entry Level Jobs for Recent Grads

3) Stick to a budget

Preparing a budget is easy, but sticking to it is the hard part. If you’re serious about budgeting, you need to follow some strict principles. For instance, stop eating out. Instead, prepare your meal at home and save a considerable amount of money. Again, if you’re going shopping, make a list and stick to it. Don’t just pick up anything that you feel like. Buy only those products that you currently need. As for other kinds of expenses like cleaning products, toiletries, hair dye and make up, you need to decide how indispensable they are at the moment.  To learn more please click here.

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