Wednesday, August 6, 2008

6 Tips to Get Out from Debts

Recently I read an article at Money Compass magazine, feel that these 6 tips should be beneficial to those who have credit cards debts currently. So, I just translate it to english and post here.

Tips 1: Face the debt honestly
There are many people not clear how much debt actually they have. Normally, they just pay the minimum payment after they receive the bill. If you have any debt, take out all the bills immediately and calculate how much debt you have now. Face your debt honestly.

Tips 2: Plan for a budget, compare the interest rate, and repay the debts as soon as possible
Everybody should plan for own budget and spend wisely. When expenditure is higher than income, we will take loans and get credit card debts. Try to avoid instalment when doing purchase, thus can save some interest. We should manage to calculate the interest for each type of loans or debts, and find the best way to save the interest. If we know that we have not enough money to spend, we must spend wisely, spend on needs, but not spend on wants. Beside, we also need to increase our income by getting part time jobs.

Tips 3: DO NOT use credit cards if you are not self-discipline
To enjoy in a short while may cause you into financial trouble for a long time. Do not think to enjoy first and pay later. When you want to swipe your credit card, you must justify if you are able to pay the bill. Make sure to clear all the credit cards bills before the due date. Reminder: credit card is a payment tool which provides us convenience. If we are not self-discipline enough, DO NOT use credit cards.

Tips 4: Restructure the debts and manage the debts
While settling the debts, we should settle the high interest debts first. Meanwhile, we can discuss with banks to restructure the debts, trying to get the plan with best interest rate, and manage the debts properly. Beside, we also can look for assistance from AKPK consultants, get out from debts by managing the debts effectively.

Tips 5: Record all the expenditure
We should record down all the expenditure according to different types of expenditure, such as meal, purchase daily necessary, phone bills, etc. With this record, we understand where we spend our money to. By adjusting our expenditure, we can allocate a portion of the money as emergency fund or for investment.

Tips 6: Forced Saving
If we have no saving at all, it is useless we mention about investment or financial management. It is very important we have savings. According to our expected standard of livings, set appropriate financial goals, force ourselves to save money regularly. It does not matter on the amount, even it is just small amount, it helps to achieve our financial goals. When there is economic crisis, this is very important, we should prepare 3 to 6 month expenditure as emergency fund. If you plan your financial early, there is no worry even during economic crisis.

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