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The word “Debt” may
be really unpleasant for some of you or you may be ready to experience debt if
you are going to apply for a loan in the near future. If your lifestyle is
bound to regular pay, the debt experience may not be a pleasant one. Therefore,
I suggest you stick to the 10 steps given in the article to achieve mental peace
while you balance debt repayments and family commitments.
#1
List out your debts
First of all, list
out all your debts. By doing this, you will not miss any of them because the
consequences may be serious if you miss any of your debt. If you are involved
in several debts, you should list out the debt installments due under each debt
at the beginning of the month. If it is
the electricity bill, your electricity supply may be disconnected which would
even risk your life.
On the other hand,
when you list out your debts and other bill payments, you can easily identify
your cash outflows and quantify the amount. Therefore, you have to live off the
balance of money available. This method will not put you into trouble by persuading
you to allocate money for payments for the month.
#2
Prioritize your debts
You have to
prioritize your debts if you have more than one debt. Here, you need to
identify loans with higher interest rates. Never let such installments to get
accumulate even if you get any fair treatment from the lender’s side. However,
you will be protected by this method, because you have already allocated for
the riskiest debt repayment. Therefore, you have to handle only low-risk debt
repayments with low-interest payments.
#3
Budget your cash flow, expenses, and loan repayments
One of the best
methods to handle your cash is budgeting. By budgeting, you have an idea to understand
the level of Cash Inflow and Cash Outflow. Cash inflow should always be higher
than cash outflow. This will lead to a healthy management of cash. If your cash
outflows are higher, you have to cut down certain expenses planned and stick to
the adjusted budget in that particular month. If you feel it is difficult to
cut down the planned expenses, you should ask for the required amount of money
from a friend of yours or your loved ones and it will protect you from unnecessary
mental pressure at the time of expense is due.
#4
Prepay debt when possible
If you receive regular
pay, prepayments of debt installments may not be possible. However, this is
practical, whenever you receive lumpsum payments such as bonuses, medical or
annual leave encashments, or a cash gift from your parents, you can definitely
go for early settlement of some of your debt installments. This will be a great
relief for you otherwise you may plan some other expense that will utilize the
lumpsum cash received by you.
#5
Create an additional income with minimum investment
When you have a debt
burden with you, an additional income will be heavenly for you to live a comfortable
lifestyle. Therefore, some sort of side hustle may be important however, there
should be a minimum investment for the start-up for such a business. Online
businesses, blog writing, and online freelancer work are a few additional income-earning
methods that need minimum investment. For online businesses, you need no traveling
and you can make the best use of your time while earning an additional income.
#6
Make earning money, your hobby
When you are in debt,
you should not hate money. You have to love money and it will attract to you in
many ways. So, you have to make it your hobby, and that passion to earn money
will bring you to so many destinations which will help you to make money in
addition to your regular pay. However, this will take you away from your
comfort zone, while still helping you to earn more money to live your life with
minimum stress level.
#7
Cut down only completely unnecessary expenses while enjoying your life
I strictly suggest
you cut down expenses that are not essential such as clubbing. You need to live
a sort of simple life but still, you can live your regular life with some
special events and happenings. Always, be alert about your expenses. Sometimes
you may have to avoid certain events if it is too expensive to join such events,
for example: overseas traveling or going on trips with your friends very often.
#8
Negotiate with your lenders
If you feel the existing
debt repayment system is not fair, you can discuss and negotiate with your
lender. Any adjustment made by the lender will be highly beneficial for you in
debt repayments. The lenders may help you by reducing the debt installment and extending
the loan period or any other method beneficial for you in the long run.
#9
Do not lose your mental and physical health
When you are in debt,
it is common that you to be physically and mentally bound by it. However, there
is a point that most of you forget to be followed is that if you are not in a
good physical and mental health condition, you will have to spend your regular
pay to consult doctors and buy medicines for your illness. If the illness prevails
long-term, your regular expenses will be very high and you will be at a
difficult level to pay your debt installments. Another main point is that your
passion to earn more money will be lost when you are mentally and physically
down. You can never buy your health. Therefore, do not give up your regular
physical exercises and have a good sleep whatever the debt you are in.
#10
Get away from liabilities
Liabilities always
pull your cash out of you. A simple example is having a pet in your house. Some
other examples are high-worth vehicles and buildings. Most of them do not
generate income but still pull-out cash from your pocket to maintain such
assets. Therefore, never let anyone or anything around generate additional expenses
which will increase your existing burden.
I think you have a better
understanding of planning your finance. Therefore, I suggest you to stick to
the above steps to live a happy life while being complied with your obligations.
The above 10 steps will never let the lender to get legal action against you as
you are well-planned for your future financials.
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