One of the key challenges facing most families is debt. And how to get out of debt is the next most pressing problem.
Expense management is one of the most crucial and effective methods of reducing debt. Eliminating all non essential expenses and introducing discipline into household expenditure is important to ensure that debt burden is reduced.
Tracking your monthly expenses is the most important factor in understanding how money is spent – so a way to track is also key and for this purpose you could use anyone of the many apps available for both Apple and Android phones. There are many so select on that is easy to use and has good reviews and is flexible enough to give a good accounting of your financial situation.
You need to track expenses for at least 3 months to discover which items are really affecting the financial situation.
Changing lifestyle patterns and expenditure patterns is key to bringing down monthly expenses. For example you might discover that eating out is costing an arm and a leg – so find an alternative place to dine for a lower amount or prepare food yourself which might be healthier and also something that might be enjoyable too.
Interest costs and finance charges could also be a huge part of your expenses if you have borrowed from many banks. Debt consolidation might help bring down finance expenses. Also consider switching to a cheaper bank by refinancing loans as and when the opportunity presents itself. Credit score also plays a key score in keeping interest costs down. So get a detailed report on your credit status and address factors affects your credit score. There may probably be errors in your credit report you may have these errors corrected by reporting them to the credit rating agency through a bank.
Budget and manage cashflows is important and will give you the ability to predict when you will have an income shortfall and give the opportunity to arrange for a temporary loan or overdraft from a bank till your salary comes in at the month end. There are many ways that you could obtain a personal loan from the bank or lending institution by offering collateral or by having a good credit record.
Increasing income is one of the most important way of coming out of debt quickly – where reducing expenses is no longer practical. Working extra hours and creating new products for sale. Part time work may also be an option where there is a lot of seasonal demand for labour – freelancing could be one of the best business opportunities that the Internet has brought around – so think out of the box when services are offered and increase competencies by learning new skills and gaining new work experiences that can be marketed over the Internet.
Selling Assets can be resorted to in emergency situations using eBay, garage sales and classifieds are on of the easier ways of getting a quick sale on items you own. Selling your house and moving out of town or to a smaller apartment could considerably reduce your debt burden.