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Debt Unburdening Strategy

debt, credit card

Nothing is easier than falling in debt. But nothing can be more disastrous than the fallouts of debt. An average working class individual in every society is in debts. What steps can be taken to avoid getting into debts? And what can be done to get out if you are already knee-deep into debts? Let us try to find answers to these debt related questions.

Can we avoid falling into debt?

Debt is a fact of life. When debt becomes unmanageable, we enter into debt trap. The interest on debt goes on compounding. The interest and penalty on initial debt go on accumulating leading to the debt –trap. We can surely avoid falling into debt trap.

Debt cannot be avoided altogether, because it serves useful purposes too. Debts (loans) in cases of education, housing etc. can be seen as investments.

What or who should be blamed for getting into debt?

Spending and over spending on credit cards is the major cause of debt. The interest rate on credit cards is very high leading to unmanageable debt.

If a credit card were manageable for you, the best strategy would be to subscribe to a low interest credit card.

What type of credit card should be chosen?

As a rule of thumb, choose credit cards with longer interest-free period and lesser interest to avoid debt. Choose the credit card having the optimum combination of the two.

Choose a credit card with zero percent interest offer of a limited number of days and be quick to switch over to a better option after the deadline.

Should the debts be converted into a single loan?

That’s what debt-consolidation companies often lure you into. You may feel an instant relief at having some one take care of all your debts. But the caution is advised here. You must see ‘red’ in the high interest rates charged by them.

Payment protection insurance terms tagged with this loan are often unfair and do not cover you, if you fall ill or get out of job.

They are secured loans and failing to pay installments can have disastrous consequences. The better strategy would be to go for unsecured personal loan to pay-off your debts in a single stroke.

How should the debt be managed?
The debt must be managed before they become unmanageable. Debt can be stressful. Therefore, share your worries with the close members of your family or friends. This will make you calm. You should be peaceful under every condition.

Give a cool headed thought to your priorities. First priority naturally goes to meeting repayments on essential services, for example, mortgage and utility bills.

If in case you are to pays credit and store card bills, first priority should be give to those with the higher interest rate.

You can also go for balance transfer deals in favor of a card with lesser rate of interest.

Finally, the company officials are likely to be sympathetic to your case and enter into settlement with you because debt recovery can be quite expensive offer them. Under the terms of settlement you are likely to get a considerable discount.

Published: 2007-04-18
Author: Ajit Jha

About the author or the publisher
I am a writer with 15 years experience having worked in Times of India and several other publishing groups. I am of the opinion that amongst the several other roles I have as an author, the most primary one is to use writing for creating evolved human beings and a pacifist world order. Although I have an experience in different genres, I prefer these days to write on spiritual, motivational and self-help subject matters.

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