How to Escape the Debt Trap

Everyone wants to become debt-free. The thought of finally getting out of debt could be truly overwhelming. You may not have to owe $10,000 to get that thrill on the idea. Whether your current loans are worth just a few hundreds overall or thousands, you need to make sure you would soon pay off all your outstanding loans. Debts usually incur interests and other charges.

The longer you keep them, the more you would have to pay on top of the principal amounts.
Another common source of debt these days are credit cards. For sure, you may have more than one credit card. If you do not pay your credit card bill in full each month, you would slowly accumulate such debt until it gets out of control. Before things get worse, you should start putting up an action plan so you could slash down your debt immediately.

Stop spending

So how could you possibly escape the looming debt trap? The first major action would be to totally stop spending. Fight the urge and temptation to keep on spending or to overspend. Just imagine how much you could save in a month if you would successfully win that fight on a daily basis. As a basic tip, it would be wise to spend only on necessities. You may try to cut down on discretionary or optional expenses. If you do not need an item that you still do not own, why would you buy it? Prioritise your needs instead of your wants.

Analyse your debt

Work out how bad the situation is. Try to make a comprehensive list of your current debts. This would get pretty interesting if you use more than one credit card. On the list, jot down all your credit cards, your spending, and your outstanding home/car/personal loans. Write down your outstanding balance, interest rates, and minimum monthly payments. Sum up all the items to determine how much you currently owe to your creditors.

Set a budget

It is high time to set a personal budget, especially after knowing the total of your current or outstanding debts. The best way to work on one is to list down all your income and expenses. If your debt has spiraled uncontrollably, you surely have been spending beyond your means. The next logical thing to do is to reassess your personal finances.

Boost your Income

Find and implement ways to boost your personal income. It would also be ideal to cut back on your spending to be able to save money. Intend to use that amount to make extra repayments so you could significantly lower your debt. Doing so could also help you repay your loans faster.

As you go on and try to escape the debt trap, it would be best if you would stick to your resolve not to get significantly indebted again. Getting a loan is not bad but be sure you get and use that debt only for practical purposes. Try your best to avoid having to apply for and obtain a loan again in the future.

This guest post is from Andrew Black. Andrew has been working in the debt consolidation industry for several years and like share his knowledge on how to avoid debt.


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