Credit cards may have helped people in carrying and using money in a compact form but they've also made you susceptible to overspending. Credit cards or plastic money can be a blessing and a curse both! “Buy now - pay later” is a very attractive proposition, but it's basically signing your own death warrant. Usage is one thing; abuse is an entirely different matter!
Although the facility of using money and paying it later may seem appealing but in actuality it may cause some considerable problems. The added interest rate on the actual used amount may pile up to an alarming scale which alone may be difficult to pay off (the entire payable amount is even more). The interest amount in many cases may keep on adding up each month instead of staying at a fixed value. This compound effect means that your interest payable will keep increasing each month if you don't pay the minimum amount.
In case one finds themselves in such a situation where the debt amount may have reached an uncomfortable level, they can consider choosing one or more of the following methods to help relieve the debt issue and maintain an acceptable income-expenditure balance.
One of the first practical approaches can be to attempt to reduce your expenditure wherever possible. Even small savings of a few dollars or so help save thousand dollars over the long run which you can use to pay back compound interest. You can save up in areas such as food expenses, traveling, money spent on hobbies and luxuries like buying new gadgets or going to the movies. Some of your savings can also be used to pay off your debt instead of keeping them in the bank.
A second option to pay off debt in shorter period can be to find a second job. The income generated from the second job can be very helpful in reducing your debt quickly and can also give you more money to cover your other expenses. However, this would require a lot of hard work.
In case of debt owed to more than one company, finance professionals may suggest to first pay off the debt with smallest value. Once that's done, you'll have more money to redirect to your larger debts and hence make it easier for you to pay back all of your debt sooner. After clearing the lowest debt payment, the next lowest debt should be considered. In this manner, the due payments can potentially be paid off faster than trying to pay off the debt with highest amount first.
Although the facility of using money and paying it later may seem appealing but in actuality it may cause some considerable problems. The added interest rate on the actual used amount may pile up to an alarming scale which alone may be difficult to pay off (the entire payable amount is even more). The interest amount in many cases may keep on adding up each month instead of staying at a fixed value. This compound effect means that your interest payable will keep increasing each month if you don't pay the minimum amount.
In case one finds themselves in such a situation where the debt amount may have reached an uncomfortable level, they can consider choosing one or more of the following methods to help relieve the debt issue and maintain an acceptable income-expenditure balance.
One of the first practical approaches can be to attempt to reduce your expenditure wherever possible. Even small savings of a few dollars or so help save thousand dollars over the long run which you can use to pay back compound interest. You can save up in areas such as food expenses, traveling, money spent on hobbies and luxuries like buying new gadgets or going to the movies. Some of your savings can also be used to pay off your debt instead of keeping them in the bank.
A second option to pay off debt in shorter period can be to find a second job. The income generated from the second job can be very helpful in reducing your debt quickly and can also give you more money to cover your other expenses. However, this would require a lot of hard work.
In case of debt owed to more than one company, finance professionals may suggest to first pay off the debt with smallest value. Once that's done, you'll have more money to redirect to your larger debts and hence make it easier for you to pay back all of your debt sooner. After clearing the lowest debt payment, the next lowest debt should be considered. In this manner, the due payments can potentially be paid off faster than trying to pay off the debt with highest amount first.
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