If you want to know how to become debt free, then this article will give you some suggestions. But before I get into that, let's take a look at how this all started. Getting out of debt is great and all but unless you learn how to stay out of it, you may find yourself getting back into debt pretty quickly. Debt is something that the majority has. There are two kinds of debt. One is good while the other is bad. Knowing the difference can make a big difference.
Good debt is basically anything that will make you money down the line. When you buy a home, you are borrowing money which means you are going into debt. This is a good thing though because your home, overtime, should make you money through appreciation. Education is also considered good debt because you are learning skills and obtaining knowledge that you can use to make more money down the line.
Bad debt is anything that will not make you any money. Most of this is consumer items such as clothes and even your car. When you use your credit card to buy consumer items, unless you are paying everything off before the end of the billing cycle, you will be charged interest on it. You aren't making any money so you need to avoid using credit to buy these types of items.
If you have a lot of credit card debt, learning how to become debt free and staying debt free will make your life a lot easier. So let's take a look at some things you can do to get out of debt. The first thing you need to do is cut down all of your expenses. Some people will say they don't want to deprive themselves. The fact is that if you got yourself into this mess, you need to make some sacrifices if you want to get yourself out of it.
Figure out what you are spending on a money basis in different areas such as dining out, entertainment, shopping, etc. Once you have all of that, see what you can cut out. The more money you are able to save, the more money you will have to pay down your debt. The next thing you will want to do is to increase your income. This may mean taking a side job or even asking for a raise. The point is to have more money in order to pay down the debt.
If you have multiple credit cards, then there are two approaches you can take. The first is to pay the minimum on all of them except for the one with the highest interest. Use all of the money you have to pay down your debt and put it on that card. This way, you will be able to cut down the amount of interest that you are paying every month. What you can do is call each credit card company and ask them to lower the interest rate. It's a bit harder these days than it was before but it doesn't hurt to try.
Another way is to put all of that money into the card with the lowest balance regardless of the interest rate. The reason for this is to quickly pay off those lower balanced cards. This will psychologically motivate you to keep up with the sacrifices you are making. Once you pay off a card, don't close your account since it may affect your credit score. Just cut it up and don't use it anymore.
If you want to know how to become debt free fast, then be careful for the scams out there that will promise to make you debt free really quickly. Many of them will end up ruining your credit and put you more into debt. What it really comes down to is discipline. It may take some time but if you stick to your payment plans, cut down on unnecessary expenses, find ways to make more money, and be patient, you will eventually become debt free.
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