Doing away with your debts |
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Published
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Thu, 03 Mar 2005 01:00
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Did you know, in UK, consumer borrowing has crossed the £1 trillion mark? This figure is not only worrying the economists, but also those with large debts as the interest rate are increasing multifold. But with little bit of understanding and patience you can do away with your debt burden. Here are few tips on how to ward-off debts.
| The thumb rule is that the faster you clear your debts, the less they will cost you. If you have credit card repayment, make sure to pay off as much as possible each month instead of just paying the minimum balance amount.
At times it becomes difficult to clear credit card outstanding due to higher interest charges. In such case, try and transfer your balance to a credit card company that offers zero per cent interest rate for couple of months. This will help you save a lot of money.
Similarly, if a bank is charging you high interest rate on some overdrafts, say as much as 10 per cent, the best option will be to switch to a bank that offer much lesser charges, say 6.9 per cent or so.
Since regular overpayments is not feasible in the case of personal loans, open a separate savings account and drop as much amount as you can afford, so that once you have accumulated enough cash, the loan can be cleared at one go. Of course, early redemption charges will be levied, but it’s worth repaying the loan early.
Are you overspending? If yes, start controlling your outgo by maintaining a diary and daily noting the expenditure you make. Cut down on non-essential items and think twice before spending. If necessary, try and search for alternative, cheaper products and make sure to pay by cash.
The best way to keep you finances under check is by creating a monthly budget, which should consists of only necessary things.
Switching your energy and phone bills to the cheapest providers in your area makes sense as it will save you considerable amount of money.
Also, try and increase your income by working overtime (if the company pays for it), or take up a part-time job or keep a paying guest. This way you can clear your debt faster.
Try and sell your possessions like gold, unwanted items…the money received can then be used for clearing your debts.
As a last resort, though it may sound bit awkward, move in with your relatives or parents as this will save you considerable amount.
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