Steps To a Debt Free Life

Many people find themselves in a very bad situation of receiving rising credit card bills monthly. Some find comfort in receiving a bigger salary although eventually get caught in the same situation as higher salary equates to a more expensive lifestyle and sadly, higher credit card debt. When a person cannot pay a credit card bill at the end of the month, it should cause an alarm instead of waving off the bill and paying the minimum.

This is the exact attitude that gets people in debt – no matter the income. When it is too late, and the person is caught in credit card frenzy, there is no reason to panic, taking charge and planning ahead with a level head is a must. Here are several steps to a debt-free life.

The first step in paying off debt is breaking free from the habit of paying only the minimum requirement. Every month, it is advisable to struggle to pay as much as possible to cut off more debt. While this is tough, it is a necessary consequence of over-spending. All credit card holders must keep in mind that paying off the minimum amount due will leave a person deeper in debt as interest rates go higher by the month.

In order to allot a bigger budget on credit card bills, one must reflect on the monthly expenses and thoroughly check which ones can be cut. In other words, simplify life and let go of self indulgences – at least while debt is being paid. After months of practicing self-control, the person may even realize that it is much better to just keep a few occasional indulgences and permanently live a lifestyle well within the means.

The credit card debts must be paid by any means possible. If the person keeps a savings account, no matter how painful it is to do so, take out some money from the bank and pay off the bills. The interest rate of the credit cards may be higher than the earned interest rates that a bank offers, not paying the bill would eat up more money in the long run.

Some may have several credit cards to pay off. It is worthwhile to review the interest rates of each card and if the need arises, transfer all the balance to the card with the lowest rate. This way, the other credit cards will be paid off and the person can focus on one big enemy to tackle. But this should not be considered only as a last result, consolidating credit card balances could very well lead you to a debt trap. It is not rare for banks to offer easy payment plans to get those in debt to transfer the balance to them. Promotions include lower interest rates or extended payment plans. Whatever the promotion, it is worth the attention and it may save the debt or a few hundred dollars that can be put into paying the bills.

If the debt is still overwhelming, it may be time to make an appointment with the bank and let them know the situation. Most banks would adjust to the debtor as it is always better than absorbing the cost of bankruptcy. They will apply extended terms and no interest without any legal action as long as the debtor is able to pay off the whole debt.


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