Most of the time people do not budget their expenses and enjoy a lavish life. The result- they are head to toe in debt. Most of their paycheck goes out in making monthly payments towards these debts. So to meet their bare minimum requirements they again look forward to new debt and hence the cycle goes on. They are stuck in debt forever.
In order to get rid of this debt there are a few things which everyone should consider-
1. Budget & Plan your expenses.
2. Consolidate your debt in a in a single low-interest loan which can save on interest payments and speed the process of paying off debts.
3. Save for future needs and emergencies.
Debt Consolidation may sound as a good option but, beware of the consolidators who promise to get you out of the debt trap but infact drag you into another. Many of these debt consolidators build in a fee and collect it as part of the monthly payment you make to them towards the loan. They may promise you lot of things and present a picture that may make you feel that you can sit back and relax. But, all that is not so true.
Balance transfer may also not be a good option to consider as the rates are guaranteed only for a short period of time and if you cannot make the payment in full by then than you will be subject to their exorbitant interest rate.
In order to get out of the debt,
Some of the options you may want to consider are –
1. Refinance your home mortgage if you have equity in the house and cash out to pay off the high interest loans. Interest rates are low and this may be a good option to consider.
2. Get a home equity loan.
3. Negotiate better terms with the current creditors.
4. Sell off any asset/investment that you may own which is not earning you good returns.
5. Take a loan from family members or relatives.
Do your own homework. Everyone has a right to a debt free life and you can achieve it too if you plan ahead and stay firm on your decision…