It’s okay to be in debt as long as you can comfortably sustain the repayment and lead a comfortable life. A huge percentage of the world’s population is actually made up of middle and low income earners. This means that as much as it’s possible to live debt-free, more often than not people take credit facilities to purchase or acquire the things that they cannot otherwise pay for in cash. In the process of satisfying wants, there are those who fall deeply into debt, finding their incomes barely sufficient to pay back the creditors and meet their daily needs. There are still prudent ways to cut debt and live comfortably. Here are some useful tips for reducing debt:
Draw up a budget
It’s important to draw up a budget for your monthly expenditure. It’s so easy to overspend when you don’t have a laid down plan of how you’ll utilize your cash. Proper planning will go a long way in minimizing instances of impulse buying.
Consolidate credit facilities
Paying back different loans at the same time can be cumbersome. To create some relief, you can consolidate all your loans under a single credit facility. This will ease up the monthly burden that comes with loan repayment. It also allows you to divert resources to other investment opportunities by increasing your liquidity.
Avoid buying stuff when it’s not really necessary to buy them. That new car can wait when the one you currently have is functional and serves you well. Consumerism is what drives a lot of people into debt. They end up buying things just to compete with friends, workmates or even relatives. Having your priorities right will help you avoid debt.
Try to pay for things in cash
When you are used to paying for things in cash, you’ll avoid spending unnecessarily, unlike when you make use of credit cards. It’s also easy to track your expenditure this way because you are able to know how much cash you had and the amount that you have spent so far. Paying for things in cash is also part of living within your means because you basically spend what you have. A credit card can prove to be a huge liability when you are a shopaholic, not to mention the interest charged.
Downgrade on expenditure at home
Things like magazine subscriptions, daily newspaper purchases and even premium cable packages can strain our monthly expenses and drive us further into debt. You can eliminate areas of expenditure that are not very necessary and only remain with essential services. There is no harm in downgrading your cable package and only paying for what you really need to watch.
Sell items you don’t need
There are items we keep in the house but don’t really use. This can be an awesome way of raising money and clearing some debts. You can have a garage sale where neighbors and friends can buy items such as electrical appliances, clothes and bicycles.
These are some wonderful tips for reducing debt and maintaining a healthy financial position. Even if you can’t live completely debt-free, you can still keep the amount of money owed at a minimum.