Advices on how to be debt-free.

It is so easy to get that new cellphone model and charge it to your credit card. But it is even easier to accumulate a mountain of debt if you are not careful. Here are some tips on how to manage debt and finances…

1.) The first thing to do if you want to get out of debt is avoid getting deeper into it. “This means no more charging anything to a credit card. It means that you might have to put off purchases, find other ways of getting what you need or even go without to quit adding to your debt.”

2.) People in debt should put away their credit cards or even cut them up to stay away from temptation.

3.) A lot of money is paid on interest over the years with credit cards and other debts. She advised paying as much extra as possible on the credit card with the biggest amount owed while making minimum payments on the others. “When that highest card is paid off, start the process with the next card on the list. Carry out this procedure until all the cards are paid off.”

4.) Experts do not agree about keeping a low-interest credit card for emergencies. Dave Ramsey, author of The Total Money Makeover: A Proven Plan for Financial Fitness, said you need to cut up all your credit cards. “The bottom line is how you define an emergency. If it’s seeing a great deal on something you’ve been wanting like a new guitar and you don’t have enough money to cover it right now, that’s not an emergency,” he said.

5.) Experts said you should tell yourself the truth about your finances and be clear about your finances.

6.) Know about your credit cards. When you get the bill, look it over until you find the annual percentage rate, which is the interest rate. Credit cards sometimes list other percentages and fees but the annual percentage rate is what will get you in the end.

7.) It is always good to take a simple approach to money and getting into more debt to pay off old ones is not the way to go about it. “It may temporarily get you out of some of your debt, but it does nothing to keep you out of it”.

8.) The most important debts are the ones where the creditor has a drastic sanction like repossession (mortgage arrears), cutting off your supply (utilities bill) or imprisonment (council tax, child support). You need to agree repayments on these debts first before tackling your credit debts.

9.) Cutting down on expenditures like food, clothing and shelter. “It’s easy to underestimate the amount you spend on essential items like food and fuel,”

10.) Making minimum payments each month, paying high-interest rates and outrageously high-late and over-limit fees and transferring balances between credit cards all the time will definitely not get you out of debt. Bickell got himself out of heavy deby with a process called debt negotiation, where you negotiate with your creditors to pay off (or settle) all of your credit card bills at a reduced amount—often at a savings of 40-60 percent.

11.) Other ways of getting yourself out of debt, which include debt acceleration or paying off high interest bills first; transferring your balances all the time to different credit cards and bankruptcy, are not as effective as debt negotiation.

This entry was posted on Tuesday, October 23rd, 2007 at 2:45 pm. Viewed 329 times, 2 so far today and is filed under Life, Opinion, Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.