Are your mounting debts giving you restless nights and making your life stressful? Do you want to achieve the ultimate goal of getting debt-free and break away from your car loan, mortgage, or credit card repayments?
If your answer is a resounding “yes” to the above questions, then you seriously need to take some extreme action to start on a journey towards your financial freedom, and eliminate debt from your life, for good.
Debt elimination should be the top most priority for any person who has a debt burden hanging on his/her head. This is regardless of the fact that they feel their finances are balanced or not. As we all know, financial freedom does not come easy. It takes real, dedicated effort on your part with many sacrifices on the way, in order to get where you want.
Before we look into how debt elimination can take effect in your life, it’s important to learn closely how exactly people get themselves in extremely tight financial situations, with debts mounting day by day, without any sign of progress. The most common reason as to why debt accumulates in the life of the majority of the people is – unplanned expenses. Now these expenses can include emergencies, medical costs, home/vehicle repairs etc. Even though most of these are out of your control and sudden, what really gets people into trouble is – the “Lack of Financial Discipline.”
Majority of the individuals don’t really have a plan or a budget to work with to achieve their financial goal. This strongly applies when it comes down to getting debt free. Therefore it’s critical to have a real, workable plan and financial discipline you count on, or else your creditors will hold your future hostage. Not really what you’d want.
Most of the people are pretty confident about the fact that they know how much money they really owe by just having a look at their balances on their statements. But the truth is far from it, as many don’t even want to think about what’s running in the background. This is why they have absolutely no knowledge on how long it would take to pay off the growing debt and how much would be the total amount (with the interest added) that they will be paying until the loan is completely paid off. When you’ve got your numbers all screwed up, how is it possible for you to plan your debt elimination and get to your goal of achieving financial freedom in the truest sense?
What is a Debt Elimination Plan?
A debt elimination plan is nothing but a plan of action, or a clearly defined statement that denotes specific goals/actions that are to be achieved in a given period of time.
For the creation of your debt elimination plan, an exact representation of your financial state is required. In order to achieve this, you’ll need to create a “personal budget” sheet outlining your total income in comparison to your total expenditure. To make your job easier, there are free personal budget sheets available on the web that you can download, which cover all the needed aspects of money management on a personal level.
Next you need to obtain fresh copies of your credit report from all the 3 main credit bureaus; ‘Equifax’ ‘Experian’ and ‘TransUnion’. Legally, you have the right to get a free credit report from these three credit bureaus once a year. The quickest way to get your copy of the report is to request it online from them. A lot of people get scammed by online companies that provide this service for a fee, so be careful about it and get your copy at absolutely no cost.
So, why do you exactly need fresh copies of your credit report? It’s to check your credit ratings status, which becomes extremely important during your debt elimination procedure, which will allow you to get better rates of interest and terms for “consolidation loans” which we’ll be looking into.
Once you’ve gone through these two important steps, that is when you actually create your debt elimination plan.
How Will a Debt Elimination Plan Help Me Reach Financial Freedom?
It’s a fact, that it’s easier to reach goals/objectives when you have well-structured plan to follow and the same applies to a financial plan, which basically means that a debt elimination plan will greatly help you in reaching your destination, with less stress and in a much easier way when compared to not having a plan in hand.
Your main aim is to have good amount of money on the table which helps you pay your debt and you move in this direction by targeting your own personal budget, cutting on your spending as much as humanly possible. You’ll be surprised on the savings you make by going for cheaper brands, making use of public transport or walking instead of taking a drive, saving energy at home; the list is seemingly endless. This not only helps you in saving enough money to pay off your debt, but it’ll also greatly reduce your carbon footprint as you move ahead!
Your subsequent aim should be to try and reduce the interest rates applied to your debt where possible. Most of us have credit cards, and since usually they carry really high rates of interest, you need to target them first.
There are a number of ways to bring down the interest on your current debt by transferring credit card balance to home equity consolidation loans. You’ll see that some would be more appropriately applicable than the others. One method that works conveniently well in the reduction of your debt when compared to the other methods is consolidating your loans.
Before you make any strong commitments with the lenders of debt consolidation loans or any other kind of loan that will help in eliminating your debt soon, it’s always a good idea to research and do your homework on the other types of methods available.
If you’re really firm in your determination on leading a debt free life and to reach this goal as soon as possible, you should look into such methods of eliminating debt before you plan out your agenda.
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