Friday, 9 March 2012

How to pay off all your debt?

Debt is really a trap. Once you get in to the clutches of debt you cannot escape from them. This is the old myth of debt. But if you try honestly, you can get rid of all your debts in a short while. Your debts may be from loan, from credit card bills or any other form of debt, but believe that you can pay off all of them. You must have heard of debt consolidation or debt consolidation service which helps you to escape from all your debts. If you wish to get rid of all your debts follow these steps.

1.Know your debts: This is the first step you should do to remove all your debts, just list out all your debts in a paper or diary. It may be credit card loan, housing loan, loan from your friends and relatives, vehicle loan, gold loan, secured loan, unsecured loan, personal loan etc. Whatever may be the loan just know that what do you owe to others.

2.Know the interest rate: The second step is also simple, just add the interest rate of each loan against each item in the list of debt.

3.Know how you pay back the loan: This is another step that you should add with the list that the EMI of the loan or any other method of paying back the loan. You may pay back the loan periodically with interest or just paying off the interest only or when ever is possible you paying it back. Anyway list out the method and amount of each loan payment.

Now you are completely aware of your loan. You know how much you have owed and what the interest rate is or how much additional liability add up with the loan in the form of interest or penalty and the present mode of payment and amount to paying back your debt. Now you can think about how to get rid of all these debts as early as possible.

1.Try to bring down the interest rate: If your payment is prompt, the person or institution may reduce your interest to a certain extent. Just ask them to reduce your rate of interest and they may reduce it to pay back the debt soon. There is no cost for asking them to reduce the interest rate.

 2.Low rate loan for loan payment: Take another loan with low interest rate to pay back your high interest loan. Secured loans offer low interest rate than unsecured loans. So try that way to pay off all high interest debts.

3.Debt consolidation: get help of any debt consolidation service to consolidate and pay back your all loans as early as possible.

4.Classify your loan and pay off: Some loan repayment amount gives you tax benefit. Housing loan is one of them. Try to pay off all other loans and pay off this type of loan at the end.

5.Pay off high interest loan first: If you could pay off all high interest loans with a high priority, you can save a good amount of interest and can pay off other loans easily with the saved money.

 6.Change your spending habit: If you are overspending, just change the habit and spend only for necessaries and give priority to pay off your debts.

7.Keep away your credit card from your wallet: A handy credit card may increase your credit card bill. Keep it away from you to avoid unnecessary purchase.

8.Discuss with your family members: Let all your family members know your debts and this may help you to avoid overspending and also get more ideas to get rid of the loan.

Conclusion: Try all your effort to pay back your entire loan as soon as possible, because it is eating out your income in the form of interest, which is not useful for you. Wish you a happy loan free life.

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