Staying debt-free is a good policy for anyone, but it can be very easy to fall into debt traps. Whether it’s credit card debt, student loan debt, or any other kind, it can follow you around like a dark cloud and cause all sorts of problems. Good planning is the key to staying debt-free, so let’s talk about how you can plan accordingly.
Try Not To Take On Debt
It’s a good idea to avoid taking on debt in the first place. The best way to do this is to keep a small reserve of money that you never touch unless absolutely necessary. It’s basically “emergency money.” If you aren’t making enough money to do this, you need to reevaluate your career choices. In any case, a small monetary “cushion” will reduce your need to take on debt. Most debts result from a sudden and short-term need, so give yourself a better way to meet those unexpected needs.
Consider The Use Of A Credit Counselor
There are actually a lot of nonprofit organizations that focus on helping people resolve their debts. These organizations can get you into contact with a debt counselor, or at least point you in the right direction. However, if they direct you to another organization, do plenty of research on them before making any agreements. You can start by looking up their profile on the website of the Better Business Bureau.
Avoid The Payday Loan Trap
There are all sorts of places that offer “payday loans.” The deal seems very simple: Borrow money and pay it back automatically from your next paycheck. However, these places charge a lot of extra money in the form of interest and fees. By the time it’s all said and done, you will end up paying a lot more than you received. Obviously, a place like that has to make a profit, but most of these places do not offer fair terms at all.
If you’ve already got some payday loan debt, you might want to consider the use of a third-party payday loan debt relief, as they can reduce your monthly payments and overall interest significantly.
Try To Negotiate Your Interest Rates
Pretty much all loans accrue interest. The rate and amount may vary, but all loans have this problem. Here’s the thing, though: Most interest rates are negotiable. Unless you are locked in with a firm contract, you can probably negotiate those interest rates. Even if you can’t, it won’t hurt anything to call them and try. If you have made all your payments on time and in full, and if you have not defaulted on the loan in any way, there’s a good chance you can negotiate those rates down.
Use Your Income Tax Money For Your Debts
When you get your income tax refund around the beginning of the year, it is tempting to go out and buy something nice for yourself. However, if you have debt problems, you should avoid that temptation. You need to pay for your previous indulgences before allowing yourself another one. With that principle in mind, you should take most (if not all) of your income tax money and use it to pay down your debts.
Use The Statute Of Limitations For Your State
You probably understand the idea of a “statute of limitations.” In criminal proceedings, it means you cannot be prosecuted for a crime after a certain amount of time has passed. The same concept can often be applied to debts. Depending on the age of your debt, you might be able to reduce or eliminate your legal obligations. A debt collector only has a limited amount of time to take legal action against you, so know the laws and regulations for your state.
There are plenty of other ways to potentially reduce your debt, so don’t hesitate to do a little research. However, these are a few easy tips and tricks to get you started. We hope that your efforts are successful and that you will be able to enjoy a long and happy life free of debt.