GETTING OUT OF DEBT
Debts are actually bad and can make someone bankrupt. Bankruptcy is a situation whereby one has been declared totally unable to manage his debts and thus can no longer borrow.If for any reason you find yourself in a cocoon of debts, do not give up but instead take a positive action about the situation. There are various steps and tips that can help you get out of debt, and also be able to manage your manage your funds wisely to avoid a similar situation in future.
Common debts include; credit card, mortgage loans, insurance and funds borrowed from friends. All these can land you into problems if you are not careful. Some of the creditors may even decide to take part of your assets to compensate themselves. Bank loans are actually very serious if you default to repay them especially those with collateral. Remember that the longer you keep on ignoring your debts, the worse the situation becomes. For that reason, you need to follow the step-by-step guide on how to manage your debts and become a debt-free person.
1. The first thing to do is actually to accept the fact that debts have overwhelmed you. Many people do not want to admit even if the situation has worsened. They just want to strain on themselves without getting advice from anywhere. You must admit that you landed into debts simply because you mismanaged your funds and thus it has reached a time to look for a solution. You must have conviction that there is a way out and you are ready to find a solution. This way, you will have prepared a path to get out of the situation. Determination will actually help you get out of this cocoon.
2. You can now prepare a list of all what you owe. Take a piece of paper and a pen and start listing down all what you owe your creditors. Remember that a written list is better than what you have in mind. Make everything visible through writing down on a piece of paper. Make sure that you include everything even if it is a five-dollar debt. The list should be clear and numbered. Think deep to see whether there is something you have left behind. If all has been included, place your pen on the table and prepare yourself for the next step.
3. It is time now to arrange your debts in order of importance. Note that all debts are not equal. You need to put the debts in order of importance. Refer to your list and mark those demanding debts using a red pen. You may decide to prepare a new list with the most demanding debts listed at the top. Huge debts are sometimes referred to as priority debts. They may include; secured loans, utility bills, mortgage repayment, taxes and many others.
Budgeting is Key
4. You can now work out your personal budget. Take your pay-slip and get to know how much your income is. This is very important because you will know how much you are supposed to direct into paying debts. Weigh the income with your current expenses. Refer to your list of debts and get to know how much your expenses are. A good budget will actually help you to decide what you can pay to your creditors.
5. Make sure that you clear priority debts first. This is very important simply because such debts can make you lose part of your assets. Calculate the total for all priority debts and plan how to repay them immediately. In most cases, the income is not adequate even to clear half of priority debts. The sixth step will help you on how to deal with a situation whereby the debts outweigh your income.
Read 5 more steps/tips here: http://www.infobarrel.com/Steps_And_Tips_On_How_To_Get_Out_Of_Debt#ixzz1pZWys5G5
Comments(1)