Do you have any debt from your friend or worst from lending companies? It is time to manage your debt effectively and get out of it. Indeed, with the current economy, it is very hard to maintain a debt-free status. That is why, it is essential for everyone to read every little bit of knowledge on how to manage debt effectively. Before it gets bigger and bigger, consider the following ideas on how to manage your debts and enjoy a DEBT-FREE status.
Wise Budgeting Plan for an Excess Income
How much income you get every month? List all your necessities and get the overall total. Compare the overall total with your monthly income. Is it greater or is it less? If it is greater, then you have the chance to pay your debts bit by bit. Create a bank account, which is mainly made for paying your debts in its full amount. It may take time, but the more you earn the more you have the ability to pay your debts early and enjoy your excess income after. Save yourself from its growing interests. The more you budget your income wisely, the more you protect yourself from having a debt again. Make sure that while you are striving to pay your debts, you must also strive to save some money. So, if there are financial emergency in the future, you would not turn your back to borrow money again.
Wise Budgeting Plan for a Deficit Income
If you have an income shortage after your monthly income is compared to the overall total of your necessities, then there are only two ways to be able to overcome this. First, increase your income by finding sideline works or full time work that pays better. Or second, cut your necessities as far as possible and manage to draw a part of your income to the bank and save it to pay the full amount of your debts. Either of the two is workable; however, every individual has its own different capabilities. If you are healthy enough, then consider the first choice. But if you are not, consider the second instead. Or, you may also consider both to pay your debts as early as possible.
How to Cut Necessities to Save money for Debts
Cutting necessities is risky, but if it is done wisely, it will be a huge help in paying debts. Necessities are a home to live in (suppose it is rented), water, foods and electricity. If you are renting a house, try to find a cheaper place to live for the meantime, while paying for the debt. If you own your own house, then it is better. Budget your foods wisely. You can buy cheaper foods instead, but make sure they are all nutritious so that you would not compromise your health and health of your family. Avoid eating in fast food restaurants; they are more costly and rich in saturated fat that is not good for the health. If are able to plant your own foods, it is much better. There are many types of vegetables that are not hard to plant and maintain. You can also plant your own spices. By doing this, you are cutting the large amount of money that is intended for housing and foods. So, you will have the opportunity to save money for your debts.
Necessities versus Wants
To manage debt effectively, it is very essential to know how to determine the necessity against wants. Necessities are things that someone cannot really live without. These are the building blocks of life where someone cannot function without them. Examples for this are water, foods and shelter. While, wants are those which are merely for satisfying self-desires like ordering coffee in Starbucks every morning or every snack time, or eating ice cream, cakes and fried chicken every now and then. There are many alternative cheap instant coffees, why go with an expensive one? Likewise, eating thrice a day is already more than enough, why add more? Things like these are just for satisfaction of self-desires, though some might not be bad, but it is very impractical things to do when someone is striving to pay for debts.
Determination and Resourcefulness
How determine you are to manage your debt and how resourceful you are to get out of it? These are two questions that will shed light on the topic. Determination and resourcefulness are abilities that will help you manage your debts effectively and get out of it in the earliest possible time. Make use of your determination and resourcefulness. Think as hard as you can, there will be just a unique solution to manage your debts better. If you employ the said ideas, plus combine it with your own determination and resourcefulness, there will just be a unique and better solution for your problem which you and only you may know.