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Strategies to get out of debt
Are you thrashing around in a quagmire of debt, trying to escape and do not know how? You try so desperately to stay afloat but yet find yourself sinking deeper and deeper into debt? If you ever find yourself in this type of desperate situation, there is actually no point in thrashing around in panic. Trying to crawl your way out of debt is definitely not easy but yet not impossible. Follow some of these very sound guides and you could have some hope of overcoming your debt problems.
- Do not sweep your debts under the carpet
Closing one eye and trying to ignore the fact that you are facing a debt problem is not going to make things better. In fact the reverse is true as the debts will not just simply disappear by themselves just because you refuse to accept the fact that you are in debt. Delays will make it worse as your creditors are surely not going to let you forget your debts even though you personally wanted to ignore it so much
- Do not over-spend
Do not spend more than what you are earning. Try to live within your means. It may not be glamorous but at least it is the smartest thing to do. You will have peace of mind as you will have no fear of creditors knocking on your door or being made a bankrupt.
Most often your will be tempting to go a on a spending spree for special occasions like birthdays, festivals or other celebrations. However you have to remain strong and not to indulge yourself.
Everywhere you may find sales that are designed to make consumers guilty if they do not buy and give presents to their beloved ones. Do not fall into their trap of making you feel so guilty that you end up buying bigger and more expensive presents that is beyond your means. If you find it important and a MUST to buy a present, do not make hasty and last minute shopping as it will end up expensive. Plan ahead, set money aside and look out for cheap sales where you can get the same product for a cheaper price.
Do not over-spend to try to impress other people by buying expensive cars or clothes. Appearance can make a very good first impression but ultimately it is hard work and efficiency that really counts.
- Do not be influenced by advertisements
Do not buy just because you like and believe what you see in advertisements. Do not be influenced by the ads and be taken in by their gimmicks. Instead take those ads with a pinch of salt. Advertisements today do not only sell products. It also promotes and provides you the means of buying on credit and encourages the concept of “Buy now, pay later”. Once you fall into their trap when you do not have the purchasing power, that is when your problem begins because paying later does not come cheap.
- Do not use credit card for borrowing
The easiest and most effective tool to help you over-spend is your credit card. A lot of people misuse their credit cards by spending money ahead of what they have yet to earn. At times they even use their credit cards to buy more than what they can earn.
The credit card provides you with an interest-free convenience and is only acceptable to use it provided you settle your debt promptly and in full by the required dateline. But it is definitely a NO NO to use it as a means of borrowing. By not settling the payments, you are allowing the interest to keep accruing each month which will add to the purchase cost. This will also lead to a vicious cycle as each month the interest adds up and the compounding interest starts to balloon beyond your ability to keep up with the payments. Do not every by misled by going on a spending spree on the assumption that you need to pay up only the minimum 15% each month.
- Do not buy on hire purchase if you can afford to buy
in one lump sum
When you buy on hire purchase you have to pay interests. So if you cannot afford to buy, start saving and only buy when you have sufficient savings to pay in one lump sum
- Do not buy a house if you cannot afford to
Do not be over-ambitious and commit to buy a big house when you cannot even afford to pay the monthly installments. Buy a cheaper house or just rent first while you start saving to buy later.
- Do not be a guarantor for somebody else’s loan
When you sign up to be a guarantor, you are basically agreeing to help pay off his debt when he defaults on his payments. Do not think it is safe to be a guarantor as long as there are others who also sign up as guarantors together with you. The bank can choose and decide which guarantor to hold responsibility of the debt and you could be the chosen one. There could be instances where the other guarantors cannot be traced or are also in financial difficulties which will again end up in you alone having to settle somebody else’s loan.
The odds of winning are extremely low, Also most gamblers never know when to quit. When they are winning, they want to win more. When they are losing, they want to recuperate their losses. In the end, they lost everything. Even worst, they borrow to gamble to recuperate their losses always hoping for that illusive winning streak. They end up loaning fro loan sharks and having to hide throughout their lives in a bid to escape from the loan sharks as they could not repay their loans. The saddest part is that they are the cause of loan sharks harassing their loved ones when they dare not come out of hiding to face the loan sharks.