Money can be boon as well as curse but it depends on whether or not you exercise financial discipline. If you fail to manage your money, then it can be the source of more stress and worry. Therefore, inculcate a good spending habit, so that you can avoid financial stress. Well, the definition of financial discipline may vary from person to person.
If you’ve staggering debt, then you may ruin your financial situation. In this situation, you can be financially independent only after paying off your debt. If you’ve unplanned credit card debt, then it may keep you awake all night. Therefore, eliminating credit card debt is considered to be the stepping stone to achieve financial freedom. There are innumerable techniques to eliminate your financial woes.
Here are some of the constructive tips to eliminate your credit card debt to achieve financial freedom:
1) Budget– A pragmatic tool: The first step to achieve financial independence is a budget plan. Budgeting can help you avoid financial stress as it can be easier for you to pay off the debt. It is one of the effective tools to help you eliminate your credit card debt and assist you to come out of the financial stress. You can prepare a budget plan with the help of a software tool or spreadsheet. Make sure you provide separate categories for each of the expense and income to prepare your budget plan. Budget is an effective tool to track your monthly expenses. As a result, it can be easier to understand where you’re draining your money. When you’re on a budget plan, you can avoid splurging your hard earned money. You can be well aware of your financial state and you can avert overspending.
2) Prepare a list of the owed amount: When you’re planning to pay off your debts, your primary task is to prepare a list of the owed amount. Start preparing a list of the owed amount in descending order of the interest rate. When you prepare the list, make sure you include the interest rate along with the principal balance. Start paying off the high interest debt on top of the list. In the meantime, make minimum payment on the remaining balance. Once you pay off the debt on top of the list, start paying the second high interest debt on the list. Make sure you continue the process unless you pay off the debt in full.
3) Avoid using your credit card: When you’re planning to achieve financial freedom, make sure you avoid the use of the cards. Your financial situation may complicate when you continuously use the card while you’ve staggering debt. According to the financial experts, the credit cards may tempt the consumers to spend more. Therefore, say “no” to credit cards when you’re knee deep in debt. Instead of cards you can use cash as it can help you stay with your means.
4) Use your savings: You can use your savings to pay off your current owed amount. If you don’t pay off your debts, then the accruing interest on the principal balance can make it unaffordable to pay off. Therefore, it is advisable to pay off your debts with your current savings. After you pay off the owed amount, then you can work on building your emergency funds.
5) Simple trick– Make more money: If you’re interested to build your savings and attend financial independence, then start making more money. You can start home based business without any initial investments. You can start your own home based bakery and sell the items in the local shops or among your friends and relatives. However, starting a bakery business is not a child’s play as you need to be deft in your cookery skills. Another option, you can start an online business like create a blog and get paid for promoting third party products and services in your website. You can work on your website during your spare time. Therefore, you can make extra money to pay off your debts. After that, you can use the saved amount to create emergency fund.
6) Investment– An important part of your financial life: Once you pay off your debts, start working on your investment portfolio. If you’re unable to invest on your own, then you can take assistance of a financial planner. Make sure you diversify your portfolio when you’re planning your investment. Try to incorporate high as well as low risk investments in your plan. Remember, diversifying your portfolio can help you avoid losing your hard earned money.
Therefore, you’re required to keep the above mentioned points in mind when you plan to achieve financial independence. Paying off your debt is considered to be the first step to achieve fiscal freedom and regaining control on your financial state.
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