Sans dettes: mythe ou réalité?October 17, 2018

Debt-Free: Myth Or Reality?

Once upon a time, there was a woman who lived in a shoe, and she was debt-free. Nowadays, the word debt-free sounds more like a fairytale than reality. Can being debt-free be more than a myth? Let’s see how you can make it a reality.

Know Your Debts

The first step to being debt-free is to make a list of what you owe. It should include credit cards, various loans, mortgage, overdue bills, lines of credits. Anything that you owe, and is still unpaid should go on this list. For every item listed, write down the total that you owe, the interest rate, and the minimum payment required each month.

Decide On A Timeframe

Set yourself a goal to repay your debts in a certain amount of time. Be realistic. Too short of a timeframe and you may have difficulty to make the payments. Too long, and you’ll pay more interest and might lose focus eventually.

Determine Which Debts To Pay First

It may be in your best interest to pay certain debts first. Use the list you made to pinpoint the debt with the highest interest rate. While online personal loans are easy to get and very convenient, they do have a high interest rate. Consider paying these loans first. Make the minimum payment on all your loans and credit cards, then apply any extra money on the high interest debt. You will save on the interest over time.

Another way to attack your debts is to pay off the lowest amount due first. It’s more motivating when you see your list of debts diminish, but you might pay more interest over time if that debt isn’t the one with the highest interest rate.

Close Paid Accounts

Once you paid off a debt, close the account. Only keep what you need and can manage, it will remove the temptation of reloading a credit card after paying it off.

Make A Plan With Family And Friends

If you owe money to friends or family, sit down with them and talk. Make a plan that will work for them and you, and commit to it. Write post-dated cheques if need be. You have to show them that you are committed to paying them back.

Call Your Creditors

Contact the companies to whom you owe money. Talk to them about your financial situation. They might agree to reduce your minimum payments by extending your loan over a longer period. They might also agree to lower your interest rate.

Consider Consolidating

Consolidating your debts means taking a loan to pay high interest debts. This option can be useful if the interest rate is lower than the debts you will pay off with this loan. The minimum payment should also be lower than the debts you’ll be paying, so you can put the extra money on paying off this loan.

Don’t forget, being debt-free isn’t a myth, but it can only become a reality if you pay more than the minimum monthly payment required; once you have managed that, you will be able to live happily ever after.

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