Managing debt effectively: Tips and tricks | Part 1/2

We know that Debt is overwhelming or tough, but it is not for everyone because with the right strategies and plans, you can take control of your financial future. There are many people who dealing with student loans, mortgages, and credit card balances, and for these people, managing debt is going to be a key to achieving financial stability and reducing stress. I have some tips and tricks for you that will help you to get financial freedom and you will be able to manage debt easily.

Before sharing the tips and tricks section, let me share the beautiful quotes that you should need to read and understand to inspire yourself :

"There are four things every person has more of than they know: sins, debt, years, and foes." - Persian Proverb

"Debt is the secret foe of thrift, as vice and idleness are its open foes. The debt-habit is the twin brother of poverty." - Forbes

"To preserve their independence, we must not let our rules load us with perpetual debt." - Forbes

1. Choose a Debt Repayment Strategy

How much do you owe? You should know that, and this is gonna be a first step for you to know your debt or understand your debt. Now what you have to do is make a list of all your debts, and you should include interest rates, due dates, and amounts in that list. After this, you will get help to understand which debts you have to solve first, and also help you to prevent missed payments.

Two popular methods help you pay off debt:​

• Debt Avalanche Method: Wanna greater savings in the long run, then you should give first priority to debts with high interest rates, so this way you can minimize the total interest rates, which means big savings.

• Debt Snowball Method: In this method, your focus should be on completing the payment of small debts and then making small payments for larger ones.

2.Create a Realistic Budget

Assessing monthly expenses and income is most important thing here and you can start from here. Let's say you have detailed budget and when you have a detailed budget it helps you understand incoming and outgoing money and it becomes a easy for you allocate more funds for thre repayment of debt and loans. You can consider it as a doundation step and you get lots of help from it.

3. Build an Emergency Fund

A small emergency fund is a basic human need, and even 1k USD can solve problems when unexpected expenses arise. So, a minimum of 1k USD is a requirement. This is just a minimal balance, but if you can, you can increase the fund to be useful for at least six months.

4. Pay More Than the Minimum Payment

Whenever you pay debt, make a habit of paying more than the requirement. What I mean to say is pay more than the minimum requirement, and this particular habit will reduce the principal amount very fast. Over time, you will see that interest is decreasing, the principal amount is going down, and your debt-free journey will start from here.

So these are the four very important points that you should follow but there are many more to come in the next part of this post, and for that you have to be stay tuned and wait for it.

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