In today’s generation everything is all about ‘SWAG’ lifestyle, where patience is minimum and hustle-bustle is maximum. But this swag lifestyle can make you end up with long credit card bills, heavy interest ridden debt, high EMIs and low or no cash reserves, now that is not so swag isn’t it? Have you thought about it’s solution? If the answer is YES, let me tell you the solution, like medicines, is very bitter at first but heaven once its start making its role known.
India’s Best Free On-call Corporate Fixed Deposit Investment Advisory, MoneyMindz helps you by showing step by step ways to bring the solution to work.
Did you understand what I mean? Well if not, stop using the plastic tumor i.e. credit cards. They are too good to resist when it comes to no cash availability. But one forgets that the credit period lasts only 45 days thereafter the whole amount is charged at an exorbitant interest rates (around 36% per annum).
You need to arrange the money spent along with your daily chores, like rent, bills, etc. Chaos can be seen in your financial planning by one bad unplanned swipe. Therefore, the best option is to put a stop to this tumour and start saving for buying stuff. Well borrowing more when already debt ridden, won’t help, hence step one is always stop spending through credit cards.
Let us assume you have a credit with credit limit of 1 lakh rupees and the interest will be charged until you pay the entire amount post the due date. Also you have to arrange extra money to repay the excess bill along with your fixed expenses.
Cut-down on expenses
You don’t need to starve, but eating at home, or affordable hygienic places, can help. Everyone certainly has one of those expenses, which we always feel are not obvious. So, cutting down on these unnecessary expenses will not only help save some extra buck but also bring in a healthy financial habit. Such savings can help you reduce your debt burden in addition to that reduce your debt by unnecessary spending.
If your income is Rs 50,000 and after getting rid of all your fixed expenses and loan EMIs, you arrive at a balance of Rs 10,000. If you try and save least Rs 3,000-5,000 by reducing on unnecessary expenses, you not only will help in building liquidity for next month, but also avoid borrowings in case of exhaustion of the entire Rs 10,000 before the arrival of your next income.
Heavy Targets First
High interest debts can be termed as the worst debts, clearing them should be the first priority. You need to list down all the loans you have and target to clear the heavy interest ridden debts. Usually credit card loans, or personal loans carry heavy interest rate, therefore targeting them first will make sense.
Home loans can be restructured by consulting the respective banks, thus changing the EMI figure can be helpful. Let us look into an example.
If you have a personal loan charging interest at 17% per annum. There are two ways to restructure your loan. First, approach a bank offering lower interest rate (assuming you have completed six months loan tenure) you will not require any documentation on the basis of credit report that your second bank will fall back on.
Now with the new loan amount, you can retire the old- albeit more expensive- loan and start servicing the new loan. If you save on the interest, it will help you reduce the entire outflow at the end of tenure plus EMI amount will be reduced considerably.
Second option is borrowing money from friends and relatives at lower or zero interest rate and repaying the debts. It can be a dicey option, depending upon your credibility and financial condition of family, however, you save the entire interest on loan nonetheless.
Extra workout not in the gym but in your financial life, some part-time work or extra shift could do no harm for your debts. In case of heavy debt burden, it is one of the most painful yet most helpful cures to your debt illness. First, t helps you to earn extra cash, and second it keeps you occupied thus stops you from spending money. Who doesn’t like extra money?
Avoid haste, Trust in Savings
Great Indian Sale or Big Billion Days are always very tempting, but as far as your financial budget is concerned, they are not so tempting. If you purchase anything in haste or unplanned way it be very dangerous. If thepurchases are planned, not only the debts are taken care of but also you save on unnecessary debts and its interest. For example, an iPhone looks good isn’t it? But it on EMI doesn’t make any sense if you are already are debt ridden.
Therefore, barring emergency situation which may strike anytime, this will be a much smoother ride, and worst case scenario even if an emergency arrives, you will be ready for it and not injured with debt.
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