4 Steps to Get a Handle on Your Debt
Wednesday, June 18, 2014, 1:00 AM | Leave Comment
If you are in financial debt, everyday life can be filled with feelings of anxiety and depression. No matter what you do, those feelings of financial fear just won’t go away. You constantly worry about how this problem is affecting you, and what you will do to rectify this situation. If this sound familiar to you, the good news is there is hope.
With some relatively simple changes in your financial routine you can begin the process of repairing your financial situation and getting your life back.
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Stop the Bleeding
The first step in getting a handle on your debt is knowing what your spending limits should be. As long as you are spending money outside of your means, your debt will continue to grow. By establishing a budget and sticking to it, you will spend within your means and not create any more debt. This, of course, will probably mean giving up some luxuries in life such as premium movie channels and memberships to the local gym, but it will all be worth it in the long run.
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Create a Safety Net
Take some of the money you are now saving from not paying the gym membership and the premium movie channel cost and stash some of it away into an emergency fund. According to Paddon & Yorke Inc, a Toronto debt help company, it is a good idea for everyone to have an emergency fund of at least $1000.00. By establishing this account, the next time the dishwasher breaks, you will not have to use credit to have it repaired or replaced. They also say another important thing to remember is to replace any money that is used and keep your balance at least $1000.00.
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Get a Lower Rate
If you have high interest loans or credit card debt, consider moving that debt to a lower interest card. Often times, credit card companies will give you 0% interest on any balances transferred for a period of time. After the 0% interest time ends, the credit companies will usually offer a still low interest rate after the 0% period ends. If you don’t want to transfer your balances, you could contact your credit card companies and ask for a rate reduction.
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Make a Plan and Stick to It
Once you have your spending under control, it is now time to formulate a plan to pay off the debt. You should aim to pay off higher interest debt first, and after that is paid off, apply the money you were paying towards that debt to your next debt. In a short period of time, you will see your balances going down every month and eventually go away.
By applying a few changes to your spending habits, you will begin to feel better about your financial situation. Hopefully, after some time and diligent effort, you will be able to eliminate the problem completely.
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