On India’s 75th Independence Day, free yourself from debt accumulation. here’s how
New Delhi: India celebrates its 75th Independence Day. It was on this date that the country broke free from oppressive British colonial rule in 1947 after decades of struggle and sacrifice. Today, as you celebrate India’s independence, you can also work towards debt relief in your life.
If you get rid of your debts, you will find yourself more financially secure and less mentally burdened. If you’ve taken out multiple loans and have pending credit card bills, it will take time, effort, and a lot of planning to get out of debt. However, you need to do this, because getting out of debt would make your life easier and ensure you have more money to survive and to save or invest for your financial goals.
Here are 5 things you need to do to get rid of your debt:
1. Track income and expenses: The first step is to make a list of your income and expenses while managing your debt. Start by calculating fixed costs, those that cannot be condensed or avoided each month, like rent, EMI, food expenses, transportation, etc. With disposable income available, it is important to be realistic about what you will need for the day. -live day to day. Then track variable expenses like dining costs, online shopping, etc.
2. Reduce expenses: You need to reduce your expenses in order to erase the debt. Review your monthly subscriptions, as services like gym memberships, cable TV, and online streaming subscriptions can add up quickly and drain your money. Write down how much you’ve earned and spent over the past 30 days. Evaluate the financial activity at the end of the month and if an expense seems unnecessary, eliminate it in the coming month. This can be done easily by categorizing the expenses into âNecessitiesâ and âExtraâ.
3. Automate payments: You need to make paying down debt the top priority and you can do it without missing a beat. Go for a direct debit option so that your EMI loan, credit card bill gets paid on time every month. You should try to pay the overdue amount on your credit card before the due date and avoid deferring the invoice amount to the next billing cycle as this attracts high interest and only adds to your debt.
4. Concrete repayment strategy: To get out of debt, you can adopt one or more repayment strategies. You can either “Pay more than the minimum” or choose the “Debt Snowball” option. If you have excess savings, you can pay more than the minimum amount owed each month to reduce your debt load. While you may end up paying more than the set minimum, you at least reduce the interest charged on each pay period.
Another approach could be to take the snowball method of eliminating your smallest debt first, followed by the biggest ones. This way you can prioritize the payout list based on amount, starting small. This method will help you eliminate your debt slowly and steadily. You can also take the avalanche approach where you pay off the card with the highest interest rate instead of starting with the lowest amount first. It is a faster and cheaper method than snowballing.
5. Debt consolidation: You can also consider consolidating all of your credit card payments into one account so that you only make one payment per month to get rid of the balance. Credit card companies and lenders offer debt consolidation plans at low interest rates. You can use the debt consolidation calculator available online to see how this option will work for you.
It’s worth adding that if you’ve paid the majority of your credit card bill on time, a practical approach can help you successfully pay off your credit card debt. If you have a good repayment record in the past, you can try contacting the issuer and ask if the repayment terms can be relaxed, in case your bill is much higher than expected. If you’ve been a responsible customer, most lenders, if possible, will find a solution for you.