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6 Ways to Become Debt Free

finance debt free

Are you struggling to keep up with the monthly payments on your bills? Being under the pressure of outstanding debt is a stressful experience. If you find yourself caught in a downward spiral of debt, then it's best to take action to solving the issue, rather than waiting for your creditors to start calling you on the phone and sending you nasty letters in the post. Here are seven practical tips that you can use to cut down your debt.

#1 Try Consolidating Your Debt
How does debt consolidation work? It’s a simple process of taking all of your existing credit facilities and combining them into one credit facility that you make one payment on every month. Consolidation loans can be used to refinance your loan and extend your payment, bringing your debt payment down to something that is more affordable for your budget.

#2 Always Meet Your Monthly Payment
It’s imperative that you make at least the minimum payment to your creditors every month. If you fail to do this and leave the account unpaid, you will take a knock to your credit score. Your credit score is vital to your ability to acquire finance in the future. You will need a good credit score to secure a mortgage, a business loan, or a new car, so make sure that you always pay at least the minimum amount every month.

#3 Pay Off Debts with High-Interest Rates first
Pay of those creditors that have high-interest charges first. Credit cards and store accounts have notoriously high-interest rates, so make sure that you kill those debts first. By paying them off early, you save on interest, and this is as good as saving money.

#4 Learn to Budget and Stick to It
Everyone should learn how to budget. If you fail to plan, then you plan to fail. Take account of every penny you earn and spend; you may be surprised to learn all the things you are spending money on that you don’t need. Creating a budget is a sensible way of handling your finances, and it gives you a guideline to commit to and avoid overspending.

#5 Cut Unnecessary Expenses Where You Can
Once you have calculated your budget, start to look at all the things that you spend money on that you do not need, or do not utilize. Do you need a new car? Is your cell phone bill astronomically high? How much money do you spend on food and entertainment and where can you cut back? Saving on these expenses will give you more free cash flow to pay off your creditors and reduce your debt.

#6 Earn More Money
In today’s economy, it's tough getting by on one salary. The one sure-fire way to eliminate your debt is to make more money every month. Try and see if you can manage a second job in your spare time. Activities such as driving for a lift sharing service offer low-barriers to entry and an easy way to earn income by just driving people around. If you have an entrepreneurial flair then try to open a business, you never know, it may turn into an incredible success.

The Final Word
If you follow these seven tips, then you are sure to find areas in your monthly budget that you can save costs. With refinancing, you can get out from under the overbearing weight of debt and refinance to a favorable payment. There is no reason to panic with your current debt situation, speak to a credible loan provider today and solve your debt issues.

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