How to Become Debt Free

It is nice to live in a big palatial house. It is nice to drive the latest model of a sports car. It is nice to throw big parties. It is nice to give away big presents on birthdays and anniversaries.

But is it nice if all of these things were paid for through debts, especially high interest debts like credit card? Is it nice to live in fear that these could be taken away tomorrow by your creditors? Think about it. Wouldn't you like to be a free and financial independent person?

In trying to keep up with the Joneses, you can end up building so much liabilities that it begins to hurt badly – both financial and emotionally. The long-term consequences can be quite disastrous.

But as long as things are still under control and you are determined, there are ways to become a free bird.

* Cut down on non essential expenses
Once you are used to a certain lifestyle, it can be tough to rollback. But, remember, every time you waiver, picture yourself few years down the line.

But if you are tough with your expenses now, within few years you will be debt-free and lead an independent life thereafter.

All that’s required is that you start cutting down on your extravagancies, which will not only save you from new debts, but also leave you with more money to pay off the old ones.

* Make a plan
To begin with, make a plan as to how you propose to cut down and eliminate your debt. Put down all your debts on a piece of paper – credit cards, home mortgage, loan from friends, personal loans, etc. This will give you an overall perspective of your debt. More often than not, people have only a vague idea of how much money is going out by way of debt repayments.

Logically speaking the debts with the highest rates will be the first ones to be paid off. Generally the personal loans and credit cards are the most expensive ones. Your home mortgages will probably the least expensive.

As you pay-off the expensive loans, the monthly interest burden comes down. This gives you more cash every month, thus allowing you to make bigger and bigger debt payments.

It is the initial push, which takes some effort. Thereafter, once the ball is set rolling, the effort becomes minimal.

* Earn more income
Sometimes, your situation may warrant extra efforts. Not only do you need to cut down on expenses, you also need to supplement you regular income. This will mean fewer hours of leisure and fun. But, remember the long-term goal – financial freedom. This thought will motivate you again and again.

The good part is that today there are opportunities galore to make extra bucks in your spare time. Internet has added a new dimension. You can get many assignments, which you can do from the comfort of your home. A few hours every week will add a few more dollars to your kitty.

You have to use your knowledge and skills to your advantage. See what best you can do given your skills and take up a part-time job soon.

* See a professional
Different debt products such as credit cards, vehicle loans, home mortgages loans etc. have different benefits and complexities. A financial consultant may help you to understand the complexities and prioritize your debt repayments. Moreover, he will discipline you, every time you tend to go back to your old habits.

A tax expert may help you to cut down on your taxes – legally of course. Picture yourself as a financially free person 2-3 years hence. Use that picture to goad yourself into taking some tough measures – scaling down your standard of living, cutting down expenses, working extra hours. In few years, when you actually become a debt-free person, you will look back to these years and be proud of what you have accomplished

If you'd like to find out more about how you can escape the debt trap, contact on 1300 724 307 today for a free consultation.

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