The Importance of Eliminating Debt
The Importance of Eliminating Debt
The Importance of Eliminating Debt
People who have experienced significant debt know the feeling-- the feeling that something is constantly looming over you, something that you cannot seem to get away from. The mental stress caused by debt can be debilitating, as can its influence on your wallet. When in debt, life seems limited and your finances are not your own. Getting out of this situation may seem impossible, but with the right amount of organization and dedication you can regain your financial freedom and reclaim your life.
Paying off debt seems to be a kind of oxymoron; you are in debt because you did not have the money you needed, so how are you to pay it back and continue paying your current bills? Many solutions can be offered, but it really is up to your lifestyle and how tight your budget truly is to determine the best way to pay down the balance. No matter how you do it, though, it is crucial that you eliminate your debt. The mental stress caused by a large amount of bills can be severe, and can even cause physical damage. Weight gain or loss, loss of appetite, inability to concentrate, and a vulnerable immune system are all symptoms of stress and can all be caused by debt.
The following tips will help you get in the right direction toward eliminating your debt:
Get organized. Knowing when each payment is due and how much you have to pay is crucial to eliminating your debt. Late fees will pile up quickly if the correct information is not recorded in an accessible location. But staying organized is not limited to knowing when payments are due; you should be well aware of the total amount you owe on each account, as well as the interest rate you are being charged. Being fully cognizant of all of these details will help you determine which accounts should be paid off first.
Focus on one account at a time. After comparing your interest rates and current balances, choose the account with the highest interest rate and pay it off first. To do this, make your minimum payments on all of your other bills and dump the rest of your available cash into this balance. This will not only help you eliminate this bill faster, it will save you money in interest in the long run. Continue to do this until all of your accounts are paid off.
Close your credit card accounts. After each card is paid off make sure that you call and close the account. The information about the account will remain on your credit report for 7 years, but you will remove the temptation of using the card again. This will help keep you from accruing more debt. Make sure that you call back a few days later and confirm that the account has been closed, as oftentimes the process is not completed and a second request is necessary.
Ignore credit card offers. In order to build your credit, you should have one credit card that you use for basic needs, such as gas, and pay off every month. This card may also be used in case of an emergency, such as work that needs to be done on your car that you cannot afford. Ensure that you only use this card to build credit, not to build debt. If the card's balance gets too high, lock it away with your other financial information and leave it there until it's paid off.
Eliminating debt is a crucial step in becoming financially free. When your debt has been eliminated you will be released from the stress it has caused and will be free to save your money for important things, such as a new house or retirement. By eliminating your debt you will be able to break free of its limitations and make your own financial decisions.
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