A great person once said, “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” This is very true, because the burden of debt will always hover over you until its retirement. Sometimes, buyers whose income is limited take a debt, and later on they realize they are unable to pay their instalments. When they repeatedly receive reminders, they are left with no other option then to take a second debt from some other lender and pay the instalments of first debt from the second loan.
The second debt not actually relieves your pain but creates extra trouble for you to pay the instalments of both the loans and deal with two bankers separately. Some people continue taking debts to pay other debts and drown completely in the sea of debt. Once you drown in debt, there is no way out.
Debt is not a bad thing, but letting it drive your life is not justified. When you take debt, always be prepared to get rid of it earlier. The sooner you start a debt fee life, the better it is for you. Even if you are drowning in the sea of debt, you can take over, with right attitude and through good finance management. If you are up to your neck in debt, you must figure out what are the causes of debt that have made your life miserable.
Possible causes of debt!
You take debt only when you are financially sick and what makes you financially sick is merely your poor financial management. If you cannot live within your means, you can never have good savings or emergency fund to meet contingences. Unexpected expenses like high medical costs in the absence of savings mostly require you to apply for loan.
Besides that, what make you a servant of the lender are your bad habits. If you have a habit of impulse purchasing, you are likely to spend more than your requirement. If your income is low and your expenses remain the same, you chose to buy now and pay later. Moreover, if you have a bad habit of smoking, excessive drinking and compulsive gambling, eventually you would definitely be in horrible debt.
How can you take over?
- I have personally seen other people who do not communicate their financial problems and debt situation with their families, which is wrong. I would advise you to always communicate your financial sickness to your wife and children. This encourages them to be always careful in spending and separating wants from the needs.
- If you are under a lot of debt burden but still need money, you better not go to another bank for help. You can always borrow from some relatives or friends, since it is the most flexible loan that you can ever get. This is because mostly relatives or friends do not ask for interest rates and are flexible in their terms for repayment.
- Strictly be on your budget and try to cut down on your expenses as much as you can. Alter small habits like always turn off your computer after use, keep electric appliances to minimum power, do not take kids with you for grocery shopping, and do not hang out much with friends. Though these are minor things, yet they have a major affect on your monthly budgets.
- If your debt is large and changing your lifestyle will not help you much, you always have the option of debt consolidation. This technique allows you to transfer all of your balances and consolidate your debt into one payment. You take a large debt to pay your smaller debts and as a result, you secure lower rate of interest and avoid hassle of dealing with so many debts.
- In case of mortgage loan, you always have the option to release some equity through remortgaging. Not only through it, you get a better rate of interest, but you also decrease the span of your loan retirement. Mortgage buyers even go for remortgaging twice, thrice or even more times during the span of the loan.