A debt free and financially stable life is a dream for all. However, it may be a bit challenging for many to achieve this dream. Especially, people who don’t have a regular source of income, find it difficult to overcome all the financial obstacles. Global economy is changing rapidly. In such a circumstance, when unemployment and consumer debts are making life difficult you need to be more cautious with your finances.
Achieving financial freedom may be challenging but it’s not at all impossible. If you’ll go through the current financial situation, then you can notice that consumers have become more cautious regarding their finances. As per the current reports by Federal Reserve, credit card balances are declining. The revolving credit, basically known as the money owed on a credit card has reduced to $2.06 billion in the second quarter of 2013. There is a huge drop of $8.48 billion in the credit card balance. This simply testifies that consumers are working hard to achieve financial freedom by eliminating debts. So, you can also do this with a little bit of perseverance and planning.
Some vital tips that will lead you to your dream of financial freedom
Facing financial obligations? If yes, then you shouldn’t lose your heart since there are many ways to resolve your financial woes. Whether your income is regular or not, you can still manage your expenses and avert debts. How? Well, by following the tips described below you can gradually achieve your dream of financial freedom:
- First of all accept the situation: Too much of debt and lack of savings often create fear and confusion amongst consumers. Out of this fear and confusion, people tend to neglect their debts. However, you should know that neglecting debts won’t solve your problems. Rather your debts will keep growing to make it impossible for you to survive. So, never shy away from your debts, face them instead. Calculate exactly how much you owe. May be you’ve numerous due credit card accounts, mortgages and student loan to pay off. Evaluate exactly how much you need to pay to eradicate debts. Don’t forget to calculate the interest rate. Collect all of your recent bank statements and make sure you’re not missing anything. The ultimate result of the calculation may not be pleasing but you shouldn’t be disheartened as you’re done with an important task. You know exactly what your financial condition is and you’ll be able to plan accordingly.
- Start organizing things: Once you’re done with the evaluation of debt, you should start planning for debt relief. You should organize things for successful debt elimination. For instance, you should evaluate your total monthly income. If you’ve a steady source of income, then things won’t be tough to manage. You’ll have to approach cautiously when you don’t have a regular source of income to bank on. In a situation like this you’ll have to concentrate on modifying your budget. If you’ve a family to look after, then may be you should think of earning some extra because you may have to manage lots of other financial responsibilities apart from debt elimination. So, decide how you’ll increase your income. You may apply for some part-time job or ask your family members to contribute. You’ll have to plan differently when your income is regular. You’ll have to manage your paychecks carefully. Separate a particular portion of your income for the debt payments. Reduce unnecessary expenses as much as you can. Having money doesn’t mean that you’ll have to spend it at every possible occasion. Especially, when you’ve debts you shouldn’t even think of extravagance.
- Let your emergency fund grow: Along with debt elimination you should also take care of savings. Regular savings will help you to build wealth and secure your financial future. So, every individual must maintain an emergency fund. Now, only establishing an emergency fund won’t help you much. You should make it a point to save enough in the fund. Many people aren’t regular when it comes to saving in the fund. Some people even have the habit of taking out money from the fund without any plan to return that amount. This is definitely not a excellent idea to leave the fund empty. This will only endanger the financial balance in your life. If you’re planning to use your emergency fund to get debt help, then make sure to leave at least 3 months savings behind to cushion the impact of debt. The more you’ll save the better it’ll be for you.
- Think before you swipe your credit cards: Credit cards are useful but only until they are managed carefully. When you already have huge amount of credit card debt, you should be extra careful before using the plastic cards. In fact it’ll be better to avoid using credit cards at all. Use hard cash for your purchases. This will save you from further due bills and high interest rates. Make sure not to close your credit card accounts. This will ruin your credit score. To keep credit card debts well under control you may even opt for balance transfer. Don’t forget to check the credit card terms before opting for balance transfer. You should be sure that you’ll be able to pay off the credit card debts within the offer period. Otherwise, balance transfer won’t be able to help.
- Follow a budget that suits your requirements: You should formulate the right budget plan keeping your requirements in mind. You need to include all the expenses in your budget without making it too difficult to save. Of course, this requires you to be extra cautious with budget. You may use budgeting software to make the process easier. Preparing the right budget will help you to solve your problems easily.
As you can see, you can’t expect to get out of debt almost instantly. You need to keep working constantly to ultimately defeat your debts. These 5 tips will make it easier to eliminate debts and if you’ll follow them always, then financial freedom will no longer be a far-fetched dream. Avoid accumulating debts and save as much as you can. This will surely help you to survive the ups downs in a