We hear daily in the media how debt is consuming our country. Debt does not have to consume you. Getting rid of debt is not impossible, get 3 strategies and begin to eliminate debt from your life.
Not only is debt manageable there are ways to eliminate debt and live a financial free life. Here are a few ways to eliminate debt from your life.
1. Never Pay just the Minimum Payment Due
Making minimum payments on your credit card debt will not lead you to financial freedom. It will most definitely do the opposite by helping to dig your way deeper into debt.
This all sounds simple enough, right? However, you have to factor in the interest on the credit card being compounded daily. You end up paying for a much longer period of time because of compounding.
Always pay as much as you can afford because all credit card companies compound interest daily. There is no getting around it except by paying your credit card in full each month or paying more than the minimum payment.
Any additional money toward your debt reduces the principal balance as well as the amount of interest you will pay over time. See how much you can save by paying more than the minimum payment.
Chart Source: Financial Finesse
2. Earn Extra Income
a. Request a Raise.
Are you due for a raise? Negotiate a good raise if you are due for one and save that extra money. You should first know your company’s financial standing. Make an assessment of your company’s financials. Are they in the midst of layoffs or are you hearing rumors of impending layoffs? If so, it may not be the right time to request a raise. If your company is stable and running smoothly, go ahead and request your raise.
In requesting a raise you must make a self-assessment and know your worth. What have your reviews said about your job performance? Are they positive, negative or just mediocre? Jot down your skills and accomplishments.
Lastly when requesting a raise do your homework. Research information about your profession’s salary range and decide a reasonable percentage raise to request. How much are other professionals earning in that same position. A quick search on Salary.com or Monster.com may be helpful.
b. Sell the Stuff you do not use
Do you have any clutter you are just tired of looking at? Any clothes or shoes in the closet with tags still on them? It’s time to clean house. Online auctions such as EBay make it easy to get rid of that stuff you never used. Of course, with EBay, newer items and items of value tend to sell better.
Clothes with original tags on them or shoes in the original box go faster. Older items can be listed in the classifieds, taken to a consignment store or gather your friends and family and have a good old-fashioned yard sell.
c. Get a weekend, part-time or online job.
Extra income can be earned by taking on a weekend or part-time job. With the Internet many opportunities exist for home-based businesses without much start-up costs. Some fun online jobs would be to get paid to take surveys, read emails or do web searches. A reputable website is Volition.com. It will give you a list of companies to check out for these types of online extra jobs.
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3. File Bankruptcy
If debt has become overwhelming and you just cannot see your way out, bankruptcy may be your only option. Making the decision to file bankruptcy is very difficult. It is not an indication of failure and nothing to be ashamed of. It exists for a reason.
There are two types of bankruptcy filings available to consumers; Chapter 7 bankruptcy which completely eliminates certain debts and Chapter 13 bankruptcy which creates a payment plan to tackle debt.
A means test is required which compares your income and debt ratio in addition to an approved credit counseling agency prior to filing a bankruptcy. Read more about Bankruptcy.
