Doing Away With Your Debts

Most of us have some form of debts or the other. It may be bank loans, credit card debts or the money borrowed from friends and neighbors. If you want to be safe and secure all you want is a self-sustained life. You have debts and you don't take steps to reduce them - then you are doing no good. Your debts will grow more than you expected and you might end up filing bankruptcy too.

"LET US NOT BANKRUPT OUR TODAYS BY PAYING INTEREST ON THE REGRETS OF YETERDAY AND BY BORROWING IN ADVANCE THE TROUBLES OF TOMORROW" - Ralph W. Sockman

Yes, you can't lead a life without loans. You need to have education loans, home loans, auto loans etc. But these are all part of investments. Other than these, i don't see any need to borrow money. Even for these loans you should be calculative enough to know how much a month you can pay back, how long you are going to take to get out of it and most of all - if this kind of investment really necessary at this point of life.

For other small amounts, borrowed here and there, you need to be really careful. First off these small amounts can accumulate into a big one quite easily. Or you might strain your relationship with you kith and kin. To avoid this I would like you to lead a controlled life. Do not spend unnecessarily. You can limit your food expenses to say $50 or $60 a week for a family of four if you prepare them at home. If you go to a restaurant you might spend the same amount for just one meal. You can restrict yourself to 4 movies a month instead of 10. Or you can share DVD rentals with your friends. Gas prices are soaring. You can save a lot if you used public transit systems or try to match your schedule with that of your family to share your car and some gas. There are a lot of other ways to save money without sacrificing the standard of living. Ofcourse it depends on the individuals' and family's interests and conveniences. You can be a little bit more creative in achieving this. (Note that I never said you should be a miser to save money). You can still have the same level of comfort and save quite a bit just by giving it a thought before you do something.

Initially this might seem hard to achieve. But once you start doing it, you will get into it and will be comfortable as well. When you continue this for a while you will know how easy it is and of course you will see how big a difference this will make in your budget.

Now that you have more money than you used to have, it will be easy to pay back you debts one by one. It might take a few weeks to several months depending on the debts you have and the amount you save due to these cost cutting measures. Eventually you will become debt free. If possible try to repay your bank loans as well. Some banks charge an early termination fee if you prepay the loans, so double check with the banks before you do this.

You will never know how peaceful and happy you will feel once you are out of all the debts. You paid back you debts, your loans are dealt with and now its time for savings. Let's deal with it in the next post.